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.
Optimal control of inequality under uncertainty / Forster M; La Torre D; Lambert PJ. - In: MATHEMATICAL SOCIAL SCIENCES. - ISSN 0165-4896. - STAMPA. - 68:C(2014), pp. 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.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
