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Within the context of the neoclassical growth model the author investigates the implications of (initial) endowment inequality when the rich have a higher marginal savings rate than the poor. More unequal societies grow faster in the transition process, and therefore exhibit a higher speed of convergence. Furthermore, there is divergence in consumption and lifetime wealth if the rich exhibit a higher intertemporal elasticity of substitution. The authors analyzed the macroeconomic implications of increasing marginal savings propensities. With optimal savings and infinite horizons the equilibrium sequences of interest rates and wages are unique and pareto-efficient. If savings are convex, more inequality leads to a higher speed of convergence.
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