“…Recently, this literature has examined more realistic models with persistent growth rate heterogeneity (Luttmer (2011); Jones and Kim (2018); Gabaix, Lasry, Lions, and Moll (2016)). In this case, the Pareto exponent can be obtained as the principal eigenvalue of an operator related to the transition matrix between states (see de Saporta (2005); Beare, Seo, and Akira Toda (2022); Beare and Akira Toda (2022)). Relative to that literature, a theoretical contribution of our paper is to obtain a closed‐form expression for the derivative of the Pareto exponent with respect to a parameter (here, the interest rate).…”