The upward sloping trend of rents and house prices has initiated a debate on the consequences of surging housing costs for wealth inequality and welfare. We employ a frictionless two-sectoral macroeconomic model with a housing sector to investigate the dynamics of wealth inequality and the...

Productive consumption enables the satisfaction of current needs and, at the same time, increases the productive potential of labour. Theoretical as well as empirical evidence suggests that productive consumption is primarily relevant to low-income countries. From the perspective of growth...

Four stylised facts of economic growth in DCs are set up initially. Despite its obvious simplicity the linear growth model with subsistence consumption is able to reproduce two of them: a rise in the saving rate along with per capita income as well as ß-divergence. The speed of convergence...

Growth models often give rise to saddle-point stable dynamic systems with multi-dimensional stable manifolds. It is argued that standard solution procedures used to numerically approximate the transition process are generally inadequate when the (stable) eigenvalues differ substantially in...