Instantaneous Wealth Distribution in a Perpetual Youth Model

Abstract

The Perpetual Youth model is widely used in macroeconomics to assess the intergenerational effects of fiscal and monetary policy. Little attention has been devoted to the effects in terms of instantaneous wealth distribution. In this paper, the instantaneous non-human wealth distribution that characterizes the steady state equilibrium of a Perpetual Youth model is assessed and, for this scope, a Generalized Lorenz Curve of wealth distribution at the steady state equilibrium is derived. I find that: i) an increase in interest rates increases financial wealth concentration; ii) economies with a higher population turnover rates exhibit lower financial wealth concentration.