Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/195554 
Year of Publication: 
2017
Citation: 
[Journal:] Quantitative Economics [ISSN:] 1759-7331 [Volume:] 8 [Issue:] 3 [Publisher:] The Econometric Society [Place:] New Haven, CT [Year:] 2017 [Pages:] 761-808
Publisher: 
The Econometric Society, New Haven, CT
Abstract: 
The aftermath of the recent recession has seen calls to use transfers to poorer households as a means to enhance aggregate economic activity. The goal of this paper is to study the effects of wealth redistribution from rich to poor households on consumption and output in the short run. We first demonstrate analytically how the direction and size of the output effects of such interventions depend on labor supply decisions. We then show that in a standard incomplete-markets model extended to allow for nominal rigidities and parametrized to match the U.S. wealth distribution, wealth redistribution does lead to a temporary boom in consumption but a far smaller increase in output. Our results suggest substantial value in empirical research uncovering the distribution of marginal propensities to work in the population.
Subjects: 
Multipliers
redistribution
labor supply
idiosyncratic risk
JEL: 
D90
E21
E25
E63
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

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