Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/172471
Authors: 
Böhl, Gregor
Fischer, Thomas
Year of Publication: 
2017
Series/Report no.: 
IMFS Working Paper Series 118
Abstract: 
The level of capital tax gains has high explanatory power regarding the question of what drives economic inequality. On this basis, the authors develop a simple, yet micro-founded portfolio selection model to explain the dynamics of wealth inequality given empirical tax series in the US. The results emphasize that the level and the transition of speed of wealth inequality depend crucially on the degree of capital taxation. The projections predict that - continuing on the present path of capital taxation in the US - the gap between rich and poor is expected to shrink whereas "massive" tax cuts will further increase the degree of wealth concentration.
Subjects: 
wealth inequality
US top-wealth shares
capital taxation
Fokker-Planck equation
Kalman Filter
JEL: 
D31
H23
G11
Document Type: 
Working Paper

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