Supplementary data for “Wealth Inequality and Endogenous Growth”

Advanced economies have been experiencing productivity slowdowns, rising inequality, and low consumption-to-wealth ratios in recent decades. Using an analytically tractable
endogenous growth model with heterogeneous households, I emphasize a channel that
connects inequality with productivity growth through aggregate consumption demand and
the returns to R&D. Given realistic increases in wealth (inclusive of income) inequality,
the calibrated model generates transition dynamics featuring productivity slowdowns, low
aggregate demand, and low real interest rates, consistent with the empirical trends. The
welfare cost of rising inequality is substantial and is nearly equally split between changes
in the consumption distribution and slow growth.