THE DISTRIBUTION OF WEALTH IN THE BLANCHARD–YAARI MODEL

We study the dynamics of the distribution of wealth in an economy with infinitely lived agents, intergenerational transmission of wealth, and redistributive fiscal policy. We show that wealth accumulation with idiosyncratic investment risk and uncertain lifetimes can generate a double Pareto wealth...

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Bibliographic Details
Published in:Macroeconomic dynamics 2016-03, Vol.20 (2), p.466-481
Main Authors: Benhabib, Jess, Bisin, Alberto, Zhu, Shenghao
Format: Article
Language:English
Subjects:
Analysis
Brownian motion
Consumption
Economic theory
Government subsidies
Growth rate
Income distribution
Life insurance
Macroeconomics
Standard deviation
Studies
Utility functions
Wealth
Wealth distribution
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Summary:We study the dynamics of the distribution of wealth in an economy with infinitely lived agents, intergenerational transmission of wealth, and redistributive fiscal policy. We show that wealth accumulation with idiosyncratic investment risk and uncertain lifetimes can generate a double Pareto wealth distribution.
ISSN:1365-1005
1469-8056
DOI:10.1017/S1365100514000066