Simulation of a generalized asset exchange model with economic growth and wealth distribution

Abstract

The agent-based Yard-Sale model of wealth inequality is generalized to incorporate exponential economic growth and its distribution. The distribution of economic growth is nonuniform and is determined by the wealth of each agent and a parameter $\lambda$. Our numerical results indicate that the model has a critical point at $\lambda =1$ between a phase for $\lambda <1$ with economic mobility and exponentially growing wealth of all agents and a non-stationary phase for $\lambda \ge 1$ with wealth condensation and no mobility. We define the energy of the system and show that the system can be considered to be in thermodynamic equilibrium for $\lambda <1$. Our estimates of various critical exponents are consistent with a mean-field theory (see following paper). The exponents do not obey the usual scaling laws unless a combination of parameters that we refer to as the Ginzburg parameter is held fixed as the transition is approached. The model illustrates that both poorer and richer agents benefit from economic growth if its distribution does not favor the richer agents too strongly. This work and the accompanying theory paper contribute to understanding whether the methods of equilibrium statistical mechanics can be applied to economic systems.

The model is further described in W. Klein, N. Lubbers, Kang K. L. Liu, T. Khouw, and Harvey Gould, "Mean-field theory of an asset exchange model with economic growth and wealth distribution," Phys. Rev. E 104, 014151 (2021). Minor corrections to Figs. 1 and 2 and typo in step one of algorithm

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Cited by in corpus (5)

• Mean-field theory of an asset exchange model with economic growth and wealth distribution
• Wealth distribution on a dynamic complex network
• Kinetic modeling of economic markets with heterogeneous saving propensities
• Wages and Capital returns in a generalized Pólya urn
• Wealth Inequality in Agent-Based Economies: The Dominant Role of Social Protection over Growth