To attend this lecture please email info@inet.ox.ac.uk.
The event will take place in seminar room E
This work introduces a simple, two agent, class based model of inequality, where inequality can be varied exogenously. Iexplore the effect of varying inequality upon asset prices and interest rates when utility functions imply a marginal propensity to consume which is decreasing in income. I explore this first in a static model where capital is fixed, and then in a dynamic model with both fixed land and variable capital simultaneously. In both situations it is shown that the level of inequality within a society can have a powerful effect on suppressing interest rates and pushing up asset values.