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Determinants of Wealth Inequality and Mobility in General Equilibrium

Fischer, Thomas LU (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:
author
organization
publishing date
type
Working paper
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},
  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},
}