Date of Submission


Date of Award


Institute Name (Publisher)

Indian Statistical Institute

Document Type

Doctoral Thesis

Degree Name

Doctor of Philosophy

Subject Name

Quantitative Economics


Economic Research Unit (ERU-Kolkata)


Sarkar, Abhirup (ERU-Kolkata; ISI)

Abstract (Summary of the Work)

Ever since the inception of Development Economics as a separate discipline inequality has been a major area of extensive study. Economists and researchers have deliberated both on the causes and the effects of inequality in a wide range of treatise, books and essays. So far, in this regard, two fundamental approaches came across viz., the Classical approach and the Credit Market Imperfection approach. The Classical approach was originated by Smith (1937) and was further interpreted and developed by Keynes (1920), Lewis (1954), Kaldor (1957), and Bourguignon (1981). According to this approach, savings rate is an increasing function of wealth and therefore inequality channelizes resources towards individuals whose marginal propensity to save is higher, increasing aggregate savings and capital accumulation and enhancing the process of development. The other approach, in contrast, answers a more crucial question: when does inequality matter? It argues that if there is a perfect credit market, even if there is inequality or some people have lesser wealth to start with, borrowing and lending activities would mitigate the problem of investment due to lack of initial wealth and thus eliminate the initial impact of inequality. When the credit market is imperfect in the sense that it creates a wedge between the lending and borrowing rate then people with lower collateral become credit-constrained and the impact of initial inequality might get perpetuated.


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Creative Commons Attribution 4.0 International License
This work is licensed under a Creative Commons Attribution 4.0 International License.


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