Download or read book Essays on Consumption Saving and Wealth Inequality written by Fang Yang and published by . This book was released on 2006 with total page 254 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Saving Bequests Altruism and Life cycle Planning written by Laurence J. Kotlikoff and published by MIT Press. This book was released on 2001-06-22 with total page 596 pages. Available in PDF, EPUB and Kindle. Book excerpt: This collection of essays, coauthored with other distinguished economists, offers new perspectives on saving, intergenerational economic ties, retirement planning, and the distribution of wealth. The book links life-cycle microeconomic behavior to important macroeconomic outcomes, including the roughly 50 percent postwar decline in America's rate of saving and its increasing wealth inequality. The book traces these outcomes to the government's five-decade-long policy of transferring, in the form of annuities, ever larger sums from young savers to old spenders. The book presents new theoretical and empirical analyses of altruism that rule out the possibility that private intergenerational transfers have offset those by the government.While rational life-cycle behavior can explain broad economic outcomes, the book also shows that a significant minority of households fail to make coherent life-cycle saving and insurance decisions. These mistakes are compounded by reliance on conventional financial planning tools, which the book compares with Economic Security Planner (ESPlanner), a new life-cycle financial planning software program. The application of ESPlanner to U.S. data indicates that most Americans approaching retirement age are saving at much lower rates than they should be, given potential major cuts in Social Security benefits.

Download or read book Essays on Consumption and Wealth Distribution written by Neng Wang and published by . This book was released on 2002 with total page 194 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Three Essays on Household Saving and Wealth written by Kyeongwon Yoo and published by . This book was released on 2003 with total page 308 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Saving and the Accumulation of Wealth written by Albert Ando and published by Cambridge University Press. This book was released on 1994-03-25 with total page 419 pages. Available in PDF, EPUB and Kindle. Book excerpt: Taking Italy as their field of research, the contributors conduct a coherent analysis of households' saving behaviour.

Download or read book Essays on Consumption and Saving written by Robert Allen Vergun and published by . This book was released on 1993 with total page 208 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Wealth Saving and Financial Markets written by Steven Aric Weinberg and published by . This book was released on 2001 with total page 338 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Three Essays on Consumption Saving and Income written by Chris Carroll and published by . This book was released on 1990 with total page 318 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Causes and Consequences of Income Inequality written by Ms.Era Dabla-Norris and published by International Monetary Fund. This book was released on 2015-06-15 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyzes the extent of income inequality from a global perspective, its drivers, and what to do about it. The drivers of inequality vary widely amongst countries, with some common drivers being the skill premium associated with technical change and globalization, weakening protection for labor, and lack of financial inclusion in developing countries. We find that increasing the income share of the poor and the middle class actually increases growth while a rising income share of the top 20 percent results in lower growth—that is, when the rich get richer, benefits do not trickle down. This suggests that policies need to be country specific but should focus on raising the income share of the poor, and ensuring there is no hollowing out of the middle class. To tackle inequality, financial inclusion is imperative in emerging and developing countries while in advanced economies, policies should focus on raising human capital and skills and making tax systems more progressive.

Download or read book Essays on Macro development and Inequality written by Alessandra Peter and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: My dissertation explores various topics in macroeconomics related to the level of aggregate income in different countries and how (un-)equally it is distributed across people within a country. More specifically, I focus on firms: who owns them, how they are financed, and how their production processes connect them to other sectors of the economy. In the first chapter, I study how financial markets affect the distribution of wealth across households through their effect on ownership structures of firms. I show that, within Europe, there are countries in which firms are broadly owned and financed by large parts of the population. In these countries, business risk is more widely spread across people, and wealth is less concentrated in the hands of just a few households. The remaining two chapters are concerned with the specific challenges facing firms in developing countries. I study the interaction of different sectors of the economy and what the nature of interlinkages implies for the size of firms and aggregate productivity. These are first-order issues when thinking about policies to close the gap in output and productivity between developing and developed countries. In the first chapter, `Owning Up: Closely Held Firms and Wealth Inequality', I study how frictions in debt and equity markets affect wealth inequality in Eurozone countries. Using micro data on households and firms, I document that in more unequal countries, there are more privately held firms, and ownership of publicly traded firms is more concentrated. I develop a dynamic general equilibrium model in which entrepreneurs have the option to run a private firm and issue debt, or go public and also issue outside equity. Both forms of external finance are subject to country-specific frictions. With more access to debt, entrepreneurs can run larger firms and are wealthier. Similar to debt, outside equity allows entrepreneurs to increase investment in their firm, but it also reduces their risk exposure, which lowers savings and wealth holdings. When parameters are chosen to match the facts I document on firm ownership and financing, the model successfully predicts differences in wealth concentration across countries. The second chapter, `The Aggregate Importance of Intermediate Input Substitutability', is co-authored with Stanford PhD graduate Cian Ruane. In this chapter we ask whether economic development policies should target specific sectors of the economy or follow a `big push' approach of advancing all sectors together. The relative success of these strategies is determined by how easily firms can substitute between intermediate inputs sourced from different sectors of the economy: a low degree of substitutability increases the costs from `bottleneck' sectors and the need for `big push' policies. We estimate long-run elasticities of substitution between intermediate inputs used by Indian manufacturing plants. We use detailed data on plant-level intermediate input expenditures, and exploit reductions in import tariffs as plausibly exogenous shocks to domestic intermediate input prices. We find a long-run plant-level elasticity of substitution of 4.3, a much higher level of substitutability than existing short-run estimates or the Cobb-Douglas benchmark. To quantify the aggregate importance of intermediate input substitution, we embed our elasticities in a general equilibrium model with heterogeneous firms, calibrated to plant- and sector-level data for the Indian economy. We find that the aggregate gains from a 50% productivity increase in any one Indian manufacturing sector are on average 47% larger with our estimated elasticities. Our counterfactual exercises highlight the importance of intermediate input substitution in amplifying policy reforms targeting individual sectors. The third chapter, `Distribution Costs and the Size of Indian Manufacturing Establishments', is also co-authored with Cian Ruane. We explore how productivity improvements in the distribution sectors of the Indian economy, such as transportation or wholesale trade, impact firms in the manufacturing sector. The sale of manufacturing goods involves costs of distribution such as shipping, insurance and commissions. Using micro-data from India's Annual Survey of Industries, we document that larger plants spend a larger share of their sales on distribution. We ask to what degree these distribution costs act as a constraint on larger firms and can explain the high employment share in small plants. To explore this mechanism, we develop a simple general equilibrium model in which heterogeneous firms face fixed and variable costs of distributing their products to customers. Firms selling higher quality products sell to more distant customers and incur higher distribution expenses. We carry out some preliminary quantitative exercises to explore how much TFP increases in the distribution sector affect aggregate consumption and the firm size distribution.

Download or read book Three Essays on Income and Wealth Inequality written by Damir Cosic and published by . This book was released on 2015 with total page 228 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Inequality Interest Rates and Macroeconomic Policies written by Ludwig Wilhelm Straub and published by . This book was released on 2018 with total page 284 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis consists of three chapters on inequality, interest rates and macroeconomic policies. The first chapter explores the macroeconomic consequences of the recent rise in permanent income inequality. First, I show that in many common macroeconomic models consumption is a linear function of permanent (labor) income. This implies that macroeconomic aggregates are neutral with respect to shifts in the distribution of permanent income. Motivated by this neutrality result, I develop novel approaches to test for linearity in U.S. household panel data. The estimates suggest an elasticity of 0.7, soundly rejecting linearity. I quantify the effects of this deviation from neutrality using a novel non-homothetic precautionary-savings model. In the model, the rise in U.S. permanent labor income inequality since the 1970s caused: (a) a decline in real interest rates of around 1%; (b) an increase in the wealth-to-GDP ratio of around 30%; (c) wealth inequality to rise almost as rapidly as it did in the data. The second chapter, joint with Sebastián Fanelli, develops a theory of foreign exchange interventions in a small open economy with limited capital mobility between home and foreign bond markets. Due to limited capital mobility, the central bank can implement nonzero bond spreads by managing its portfolio. Crucially, spreads are inherently costly as they allow foreign intermediaries to make carry-trade profits. Optimal interventions balance these costs with terms of trade benefits. We show that they lean against the wind of global capital flows to avoid excessive currency appreciation. Due to the convexity of the costs, interventions should be small and spread out, relying on credible promises (forward guidance) of future interventions. By contrast, excessive smoothing of the exchange rate path may create large spreads, inviting costly speculation. Finally, in a multi-country extension of our model, we find that the decentralized equilibrium features too much reserve accumulation and too low world interest rates, highlighting the importance of policy coordination. The third chapter, joint with Iván Werning, reconsiders the well-known Chamley-Judd result, according to which capital should not be taxed in the long run. For the main model in Judd (1985), we prove that the long run tax on capital is positive and significant, whenever the intertemporal elasticity of substitution is below one. The main model in Chamley (1986) imposes an upper bound on capital taxes. We provide conditions under which these constraints bind forever, implying positive long run taxes. When this is not the case, the long-run tax may be zero. However, if preferences are recursive and discounting is locally non-constant (e.g., not additively separable over time), a zero long-run capital tax limit must be accompanied by zero private wealth (zero tax base) or by zero labor taxes (first best). Finally, we explain why the equivalence of a positive capital tax with ever increasing consumption taxes does not provide a firm rationale against capital taxation.

Download or read book Essays in Wealth Inequality written by Daniel Albuquerque and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Macroeconomics written by Corina Boar and published by . This book was released on 2017 with total page 231 pages. Available in PDF, EPUB and Kindle. Book excerpt: "This thesis consists of three independent essays on macroeconomics. Chapter 1 demonstrates that parents accumulate savings to insure their children against income risk. I refer to these as dynastic precautionary savings. Using a sample of matched parent-child pairs from the Panel Study of Income Dynamics, I test for dynastic precautionary savings by examining the response of parental consumption to the child's permanent income uncertainty. I exploit variation in permanent income risk across age and industry-occupation groups to confirm that higher uncertainty in the child's income depresses parental consumption. In particular, I find that the elasticity of parental consumption to child's permanent income risk ranges between -0.08 and -0.06, and is of similar magnitude to the elasticity of parental consumption to own income risk. Motivated by the empirical evidence, I analyze the implications of dynastic precautionary saving in a quantitative model of altruistically linked overlapping generations. I use the model to (i) examine the size and timing of inter-vivos transfers and bequest, (ii) perform counterfactual experiments to isolate the contribution of dynastic precautionary savings to wealth accumulation and intergenerational transfers, and (iii) assess the effect of two policy proposals that can affect parents' incentives to engage in dynastic precautionary savings: universal basic income and guaranteed minimum income. Lastly, I explore the implications of strategic interactions between parents and children for parents' precautionary and dynastic precautionary behavior. Chapter 2 studies the effect of banking deregulation in the US on the distribution of income, from both a theoretical and empirical perspective. We focus on the effect of the removal of interstate banking and branching restrictions over the 1970-1994 period. We present a theoretical model based on Greenwood and Jovanovic (1990) to illustrate the channels through which this deregulation may affect the income distribution. In the model, income inequality rises after banking deregulation for some values of the parameters because deregulation decreases the cost of borrowing which primarily benefits wealthy firm-owners. We empirically estimate the effect of interstate banking and branching deregulation on income inequality by exploiting variations in the timing of deregulation across states. We find that the removal of banking restrictions increased the Gini coefficient by 6 percent in the long run. Chapter 3 examines the implications of entrepreneurial financial frictions for optimal linear capital taxation, in a setting where the government is concerned with redistribution. By including financial frictions, we emphasize the effect of a new channel affecting the equity-efficiency trade-off of redistribution: taxes affect the allocative efficiency of capital and, ultimately, total factor productivity. We find that high tax rates are optimal, provided that they are applied to wealth, rather than risky capital. Under plausible parameter values, we find that the optimal tax on risky capital is lower than that on wealth, and roughly in line with current U.S. levels. This suggests welfare gains from taxing wealth at a higher rate than risky capital."--Pages vi-vii.

Download or read book Heterogeneity and Persistence in Returns to Wealth written by Andreas Fagereng and published by International Monetary Fund. This book was released on 2018-07-27 with total page 69 pages. Available in PDF, EPUB and Kindle. Book excerpt: We provide a systematic analysis of the properties of individual returns to wealth using twelve years of population data from Norway’s administrative tax records. We document a number of novel results. First, during our sample period individuals earn markedly different average returns on their financial assets (a standard deviation of 14%) and on their net worth (a standard deviation of 8%). Second, heterogeneity in returns does not arise merely from differences in the allocation of wealth between safe and risky assets: returns are heterogeneous even within asset classes. Third, returns are positively correlated with wealth: moving from the 10th to the 90th percentile of the financial wealth distribution increases the return by 3 percentage points - and by 17 percentage points when the same exercise is performed for the return to net worth. Fourth, wealth returns exhibit substantial persistence over time. We argue that while this persistence partly reflects stable differences in risk exposure and assets scale, it also reflects persistent heterogeneity in sophistication and financial information, as well as entrepreneurial talent. Finally, wealth returns are (mildly) correlated across generations. We discuss the implications of these findings for several strands of the wealth inequality debate.

Download or read book Essays on Household Heterogeneity in Macroeconomics written by Lukas Nord and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis contains four independent essays studying the consequences of household heterogeneity for Macroeconomics. The first chapter studies the implications of household heterogeneity for equilibrium prices. I break with the canonical assumptions of homothetic preferences and the law of one price to show how heterogeneity in consumption baskets and search for price bargains affects posted prices. Analytical results from search theory and empirical evidence from big data on households' grocery transactions show that price distributions respond to the composition of buyers. In a quantitative heterogeneous agent model with endogenous price dispersion for multiple varieties, I find that the response of retailers to households' search effort is quantitatively important to differentiate between inequality in expenditure and consumption. It more than doubles the direct effect of paying more or less given posted prices, which has been the focus of previous literature. Furthermore, I find that household heterogeneity helps to account for the empirical cyclicality of retail prices and markups in response to aggregate shocks, and has implications for the response of prices to redistributive policies. In the second chapter, which is joint work with Annika Bacher and Philipp Grübener, we show how households with two members can insure themselves against the job loss of a primary earner through the labor force entry of a nonparticipating spouse. We document empirically that this margin is predominantly used by young households. In a two-member life cycle model with endogenous arrival rates, human capital accumulation, and extensive-margin labor supply, we explore how differences in labor market opportunities and asset holdings contribute to this pattern. Our findings suggest that the age difference is predominantly explained by better insurance through asset holdings for the old, while differences in arrival rates and human capital play a smaller role. In the third chapter, which is joint work with Caterina Mendicino and Marcel Peruffo, we study differences in the exposure to bank distress along the income distribution. We develop a two-asset heterogeneous agent model with a financial sector and use this framework to show that banking sector losses disproportionately harm low-income households while rich households adjust their savings behavior to profit from fluctuations in asset prices. This is why welfare losses from bank distress are considerably more dispersed than consumption responses. We find the model-implied consumption responses to be in line with empirical evidence on the relationship between bank equity returns and consumption across households. In the forth chapter, I study how wealth holdings can affect households' incentives to form precise expectations about future inflation rates. I document empirically how the dispersion of expectations changes along the wealth distribution and develop a consumption-savings model with costly expectation formation to study implications for the effectiveness of forward guidance policies. I show endogenous expectation formation to significantly lower the effectiveness of forward guidance policies due to selection in which households are paying attention to news about inflation.

Download or read book Success and Luck written by Robert H. Frank and published by Princeton University Press. This book was released on 2017-09-26 with total page 202 pages. Available in PDF, EPUB and Kindle. Book excerpt: From New York Times bestselling author and economics columnist Robert Frank, a compelling book that explains why the rich underestimate the importance of luck in their success, why that hurts everyone, and what we can do about it How important is luck in economic success? No question more reliably divides conservatives from liberals. As conservatives correctly observe, people who amass great fortunes are almost always talented and hardworking. But liberals are also correct to note that countless others have those same qualities yet never earn much. In recent years, social scientists have discovered that chance plays a much larger role in important life outcomes than most people imagine. In Success and Luck, bestselling author and New York Times economics columnist Robert Frank explores the surprising implications of those findings to show why the rich underestimate the importance of luck in success—and why that hurts everyone, even the wealthy. Frank describes how, in a world increasingly dominated by winner-take-all markets, chance opportunities and trivial initial advantages often translate into much larger ones—and enormous income differences—over time; how false beliefs about luck persist, despite compelling evidence against them; and how myths about personal success and luck shape individual and political choices in harmful ways. But, Frank argues, we could decrease the inequality driven by sheer luck by adopting simple, unintrusive policies that would free up trillions of dollars each year—more than enough to fix our crumbling infrastructure, expand healthcare coverage, fight global warming, and reduce poverty, all without requiring painful sacrifices from anyone. If this sounds implausible, you'll be surprised to discover that the solution requires only a few, noncontroversial steps. Compellingly readable, Success and Luck shows how a more accurate understanding of the role of chance in life could lead to better, richer, and fairer economies and societies.