We model the optimal control of inequality for an economy experiencing growth in the mean and variance of the income distribution under conditions of uncertainty. Given quadratic losses in the level of inequality and the strength of the policy instrument, we derive a closed form solution for the optimal policy rule in a finite time horizon model. A calibrated, numerical simulation derives the optimal rule required to return the United States to the level of inequality that it experienced in 1979.

Forster M, La Torre D, Lambert PJ (2014). Optimal control of inequality under uncertainty. MATHEMATICAL SOCIAL SCIENCES, 68(C), 53-59 [10.1016/j.mathsocsci.2013.11.003].

Optimal control of inequality under uncertainty

Forster M;
2014

Abstract

We model the optimal control of inequality for an economy experiencing growth in the mean and variance of the income distribution under conditions of uncertainty. Given quadratic losses in the level of inequality and the strength of the policy instrument, we derive a closed form solution for the optimal policy rule in a finite time horizon model. A calibrated, numerical simulation derives the optimal rule required to return the United States to the level of inequality that it experienced in 1979.
2014
Forster M, La Torre D, Lambert PJ (2014). Optimal control of inequality under uncertainty. MATHEMATICAL SOCIAL SCIENCES, 68(C), 53-59 [10.1016/j.mathsocsci.2013.11.003].
Forster M; La Torre D; Lambert PJ
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11585/804160
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