Determinants of Wealth Inequality and Mobility in General Equilibrium
(2019) In Working Papers- Abstract
- What determines inequality and mobility of wealth? This paper quantifies in closed form both the bottom and the top (Pareto) tail of the distribution for a rich continuous-time model. The distribution is especially shaped by bequest motives, demographics, and the asset portfolio composition under idiosyncratic wealth risk. Factors that increase inequality also reduce mobility. The model - enriched by a realistic income process and non-trivial portfolio constraints - is solved in general equilibrium and calibrated to match US evidence. A bequest tax is shown to reduce inequality and increase mobility. Several partial-equilibrium intuitions do not carry over into general equilibrium.
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/02b98e4b-d290-44f6-a6b5-c4a7009a21c9
- author
- Fischer, Thomas LU
- organization
- publishing date
- 2019
- type
- Working paper/Preprint
- publication status
- published
- subject
- keywords
- wealth inequality, mobility of wealth, portfolio selection, fat tails, bequest tax, C68, D31, E21, G11, H23
- in
- Working Papers
- issue
- 2019:22
- pages
- 59 pages
- language
- English
- LU publication?
- yes
- id
- 02b98e4b-d290-44f6-a6b5-c4a7009a21c9
- alternative location
- https://swopec.hhs.se/lunewp/abs/lunewp2019_022.htm
- date added to LUP
- 2020-01-07 10:46:22
- date last changed
- 2020-01-07 10:46:22
@misc{02b98e4b-d290-44f6-a6b5-c4a7009a21c9, abstract = {{What determines inequality and mobility of wealth? This paper quantifies in closed form both the bottom and the top (Pareto) tail of the distribution for a rich continuous-time model. The distribution is especially shaped by bequest motives, demographics, and the asset portfolio composition under idiosyncratic wealth risk. Factors that increase inequality also reduce mobility. The model - enriched by a realistic income process and non-trivial portfolio constraints - is solved in general equilibrium and calibrated to match US evidence. A bequest tax is shown to reduce inequality and increase mobility. Several partial-equilibrium intuitions do not carry over into general equilibrium.}}, author = {{Fischer, Thomas}}, keywords = {{wealth inequality; mobility of wealth; portfolio selection; fat tails; bequest tax; C68; D31; E21; G11; H23}}, language = {{eng}}, note = {{Working Paper}}, number = {{2019:22}}, series = {{Working Papers}}, title = {{Determinants of Wealth Inequality and Mobility in General Equilibrium}}, url = {{https://swopec.hhs.se/lunewp/abs/lunewp2019_022.htm}}, year = {{2019}}, }