Monday, March 24, 2014

Krugman on Piketty

Whether what I wrote was correct or not, it seems that I have been spending my time on a good book. Krugman says "It’s an amazing book; among other things, it does an awesome job of integrating economic growth, the factor distribution of income (between capital and labor), and the individual distribution of income into a common framework. (It’s all about r-g)."
P.S. Here is what I wrote yesterday in better format (thanks to Jack Morava. Since reitirement I do not have access to the software most of the time)

P.P.S (25th March) Assuming what I wrote above is correct, one conclusion is that during periods when r_t-g_t >0 and g_t>-1, the capital to income ratio β_t  will explode unless r_t- g_t tends to zero. But this is only a necessary condition. If it tends to zero at the rate of 1/t, β_t will still explode but some thing like  1 /t^2 is fine. But these are all simple identities and do not discuss any thing of the processes involved.
P.P.S.2 What I wrote is wrong. Corrections here
P.P.S.3 Calculations of this type that I was attempting are in a paper of Thomas Piketty and Gabriel Zucman

No comments: