Università Cattolica del Sacro Cuore

CLE Seminar Series. Thomas Fischer

 14 December 2016

14 December 2016, 11:30-13:00.

Thomas Fischer, Lund University.

Title: A tractable model of wealth inequality and mobility.

Venue: Largo Gemelli 1, Milano. Room G151

Abstract

This paper presents a rich model of wealth inequality and mobility that, however, is still (partly) analytically tractable. It features finite-life times, aggregate growth, a minimum consumption level, and investment risk (either idiosyncratic or homogeneous) in a continuous time environment. Moreover, from a policy perspective a redistributive bequest tax is discussed. Other models from the literature are identified as special cases. The model can replicate several empirical features including Power-laws in the tail(s) of the wealth distribution. Key results of the model are that idiosyncratic investment risk increases wealth inequality as well as mobility of wealth. A redistributive bequest tax lowers wealth inequality and increases wealth mobility.