Foellmi, Reto; Zweimüller, Josef - C.E.P.R. Discussion Papers - 2006
impact of income inequality on the medium-run macroeconomic equilibrium. We find that (i) a sufficiently high extent of … inequality divides the economy into mass consumption sectors (where firms charge low prices and hire many workers) and exclusive … sectors (where firms charge high prices and hire few workers). (ii) High inequality may lead to a situation of underemployment …