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Abstract:

cover
CASE Paper
Piketty in the long run
Frank A Cowell
February 2015
Paper No' CASE/185:
Full Paper (pdf)

JEL Classification: D31


Tags: long run; income distribution; wealth distribution; inequality; inheritance; equilibrium

I examine the idea of 'the long run' in Piketty (2014) and related works. In contrast to simplistic interpretations of long-run models of income- and wealth-distribution Piketty (2014) draws on a rich economic analysis that models the intra- and inter-generational processes that underlie the development of the wealth distribution. These processes inevitably involve both market and non-market mechanisms. To understand this approach, and to isolate the impact of different social and economic factors on inequality in the long run, we use the concept of an equilibrium distribution. However the long-run analysis of policy should not presume that there is an inherent tendency for the wealth distribution to approach equilibrium.