This paper examines the role of income distribution in macroeconomic analysis, demonstrating that the long-run equilibrium of an economy depends on its initial income distribution. The study finds that economies with a relatively equal distribution of wealth are likely to be wealthier in the long run, providing an additional explanation for persistent differences in per-capita output across countries. The paper also suggests that wealth distribution significantly influences the macroeconomic adjustment to aggregate shocks, such as supply shocks and technological innovations. The analysis is based on a dynamic general equilibrium model with overlapping generations and intergenerational altruism, where capital market imperfections and increasing returns to scale play crucial roles. The results highlight the importance of income distribution in macroeconomic dynamics and offer insights into the historical and cross-country variations in economic performance.This paper examines the role of income distribution in macroeconomic analysis, demonstrating that the long-run equilibrium of an economy depends on its initial income distribution. The study finds that economies with a relatively equal distribution of wealth are likely to be wealthier in the long run, providing an additional explanation for persistent differences in per-capita output across countries. The paper also suggests that wealth distribution significantly influences the macroeconomic adjustment to aggregate shocks, such as supply shocks and technological innovations. The analysis is based on a dynamic general equilibrium model with overlapping generations and intergenerational altruism, where capital market imperfections and increasing returns to scale play crucial roles. The results highlight the importance of income distribution in macroeconomic dynamics and offer insights into the historical and cross-country variations in economic performance.