Krusell, P. & Smith, T. (2014) “Is Piketty’s ‘Second Law of Capitalism’ fundamental?“, VoxEU Organisation, 01 Ιουνίου.
Thomas Piketty’s new book has been widely praised for its empirical contribution, but his prediction of rising inequality rests on economic theory. This column argues that Piketty’s pessimistic forecast is based on an extreme – and unrealistic – assumption about households’ saving behaviour. According to standard theory, the wealth–income ratio would increase only modestly as growth falls, so declining growth would not be a powerful force for generating high inequality.
Over the last several weeks, we have thought quite a bit about the main message in Thomas Piketty’s now world-famous book, Capital in the Twenty-First Century (Piketty 2014). We have also discussed it at great length with colleagues. In sum, at least in our departments, there has been a massive collective effort at interpreting both the material presented in the book and the background material on which the book builds. In this column we would like to present one perspective on the book that does not seem to have attracted sufficient attention in the public discussions. We develop these arguments in detail in a separate document (Krusell and Smith 2014).
Σχετικές αναρτήσεις:
- Hoffer, F. (2014) “Inequality And Post-neoliberal Globalisation“, Social Europe Journal, 29 Μαΐου.
- Frankel, J. (2014) “How to address inequality“, VoxEU Organisation, 29 Απριλίου.
- Castelló-Climent, A. & Doménech, R. (2014) “Human capital and income inequality: Some facts and some puzzles“, VoxEU Organisation, 23 Απριλίου.