Abstract
Within the context of the neoclassical growth model I investigate the implicationsnof (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 intertemporalnelasticity of substitution. Unlike the Solow-Stiglitz model, the steady state is always unique although the consumption function is concave.
Foellmi, Reto