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    This article has been cited by the following publications. This list is generated based on data provided by CrossRef.

    Dabla-Norris, Era Ji, Yan Townsend, Robert and Unsal, D. Filiz 2015. Identifying Constraints to Financial Inclusion and Their Impact on GDP and Inequality: A Structural Framework for Policy. IMF Working Papers, Vol. 15, Issue. 22, p. 1.

    Alem, Mauro and Townsend, Robert M. 2014. An evaluation of financial institutions: Impact on consumption and investment using panel data and the theory of risk-bearing. Journal of Econometrics, Vol. 183, Issue. 1, p. 91.

    Kim, Dong-Hyeon and Lin, Shu-Chin 2011. Nonlinearity in the financial development–income inequality nexus. Journal of Comparative Economics, Vol. 39, Issue. 3, p. 310.



  • Hyeok Jeong (a1) and Robert M. Townsend (a2)
  • DOI:
  • Published online: 01 September 2008

This paper evaluates two well-known models of growth with inequality that have explicit micro underpinnings related to household choice. With incomplete markets or transactions costs, wealth can constrain investment in business and the choice of occupation and also constrain the timing of entry into the formal financial sector. Using the Thai Socio-Economic Survey (SES), we estimate the distribution of wealth and the key parameters that best fit cross-sectional data on household choices and wealth. We then simulate the model economies for two decades at the estimated initial wealth distribution and analyze whether the model economies at those micro-fit parameter estimates can explain the observed macro and sectoral aspects of income growth and inequality change. Both models capture important features of Thai reality. Anomalies and comparisons across the two distinct models yield specific suggestions for improved research on the micro foundations of growth and inequality.

Corresponding author
Address correspondence to: Hyeok Jeong, Department of Economics, University of Southern California, 3620 S. Vermont Ave., Kaprielian Hall Room 300, Los Angeles, CA 90089, USA; e-mail:
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Martin Browning , Lars P. Hansen , and James J. Heckman (1999) Micro data and general equilibrium models. In John B. Taylor and Michael Woodford (eds.), Handbook of macroeconomics, Vol. 1A. Amsterdam: North Holland.

Xavier Gine and Robert M. Townsend (2004) Evaluation of financial liberalization: A general equilibrium model with constrained occupational choice. Journal of Development Economics 74, 269307.

Hyeok Jeong and Robert M. Townsend (2007) Sources of TFP growth: Occupational choice and financial deepening. Economic Theory 32 (1), 179221.

Robert M. Townsend and Kenichi Ueda (2006) Transitional growth with increasing inequality and financial deepening. Review of Economic Studies 73 (1), 251293.

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Macroeconomic Dynamics
  • ISSN: 1365-1005
  • EISSN: 1469-8056
  • URL: /core/journals/macroeconomic-dynamics
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