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Institute for Economic Analysis (CSIC), Barcelona, Spain    — Advancing Economic Research for a Changing Society

IAE CSIC BSE

The Economics of nonhomotheticity

  • FINANCIAL ENTITY
    EUR2024-153555, AEI-Ministerio de Ciencia, Innovación y Universidades
  • DURATION
    2024-2026
  • PERSONNEL INVOLVED
    Martí Mestieri,

Rich and poor families allocate their money in very different ways. For instance, poorer households dedicate a larger portion of their income to necessities like food and energy, while wealthier households spend a smaller share on them. Economists refer to this difference in spending patterns as "nonhomothetic demand." Although this concept is well-documented, it has not been widely applied in general equilibrium economic models. The EcoNHom project seeks to address this gap with two key objectives. First, it aims to develop new tools for modeling nonhomothetic demand, allowing for a more accurate and realistic analysis. Second, it plans to use these models to explore inequality, both within and between countries, particularly in areas related to economic growth and development.