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Whatever its causes, a surge in the ratio of wealth to income in the economy can be both highly persistent and pernicious.
The ratio of wealth to income is highest among demographically challenged economies such as Italy and Japan (although both countries have managed to mitigate inequality through redistributive taxes and transfers).
So if you have an economy that saves 10% of its income and grows at 2%, then in the long run it will have a ratio of wealth to income of about 5 to 1.
The g, on the other hand, is simply the growth rate of the economy.If and when r>g, then, wealth grows faster than output, the ratio of wealth to output increases, and the share of capital income in total income rises.
From the 1970s the ratio of wealth to income has grown along with income inequality, and levels of wealth concentration are approaching those of the pre-war era.Mr Piketty describes these trends through what he calls two "fundamental laws of capitalism".
The ratio of wealth to disposable income is at a comfortable five-to-one level.
Similar(47)
Finally, an important ingredient to our computed inheritance series are estimates of (mu _{t}^{ast }), the ratio of average wealth at death over wealth of the living.
A little-discussed but crucial factor in the debate over wealth transfers from Europe's more economically sound north to its troubled south is the relationship between public debt, GDP and private wealth (households' financial and non-financial assets, minus their financial liabilities) – in particular, the ratio of private wealth to GDP in the eurozone countries.
Consider Italy, which has the highest ratio of private wealth to public debt of any G7 country, and is 30%to40%0% higher than in Germany.
In 1913, the ratio of octagenarian wealth to that of fiftysomethings was 257%; by 1947, that ratio had dropped to 62%.
The grim irony here is that the ratio of private wealth to GDP in some of the countries in need of support from the ECB and northern eurozone members is equal to or higher than that in more solvent countries.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com