A Welfare Analysis of Economic Inequality with Microeconomic Household Behavior

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The purpose of this project is to investigate quantitative importance of economic inequality and redistribution policy on macroeconomy using a dynamic stochastic general equilibrium with heterogeneous households who face uninsurable idiosyncratic income risks. There are two contributions in this project : First, I find a politically feasible social security reform, which improves welfare of future generations with political support of current generations, in a model with heterogeneous households. Second, the total factor productivity creates not only business cycle but economic inequality dynamics.