Financial and Total Wealth Inequality with Declining Interest Rates
| Autor: | Daniel Greenwald, Matteo Leombroni, Hanno N. Lustig, Stijn Van Nieuwerburgh |
|---|---|
| Rok vydání: | 2021 |
| Předmět: |
Finance
Consumption (economics) History Polymers and Plastics Inequality business.industry media_common.quotation_subject Developing country Industrial and Manufacturing Engineering Interest rate Incomplete markets Capital (economics) Economics Portfolio Business and International Management Real interest rate business media_common |
| Zdroj: | SSRN Electronic Journal. |
| ISSN: | 1556-5068 |
| Popis: | Financial wealth inequality and long-term real interest rates track each other closely over the post-war period. Faced with unanticipated lower real rates, households which rely more on financial wealth must see large capital gains to afford the consumption that they planned before the decline in rates. Lower rates beget higher financial wealth inequality. Inequality in total wealth, the sum of financial and human wealth and the relevant concept for house-hold welfare, rises much less than financial wealth inequality and even declines at the top of the wealth distribution. A standard incomplete markets model reproduces the observed in-crease in financial wealth inequality in response to a decline in real interest rates because high financial-wealth households have a financial portfolio with high duration. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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