Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/260292 
Authors: 
Year of Publication: 
2019
Series/Report no.: 
Working Paper No. 2019:22
Publisher: 
Lund University, School of Economics and Management, Department of Economics, Lund
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.
Subjects: 
wealth inequality
mobility of wealth
portfolio selection
fat tails
bequest tax
JEL: 
C68
D31
E21
G11
H23
Document Type: 
Working Paper

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