Life Cycle Models, Heterogeneity of Initial Assets,and Wealth Inequality
Autor(a) principal: | |
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Data de Publicação: | 2015 |
Outros Autores: | |
Tipo de documento: | Artigo |
Idioma: | eng |
Título da fonte: | Repositório Institucional do FGV (FGV Repositório Digital) |
Texto Completo: | http://hdl.handle.net/10438/13886 |
Resumo: | Life cycle general equilibrium models with heterogeneous agents have a very hard time reproducing the American wealth distribution. A common assumption made in this literature is that all young adults enter the economy with no initial assets. In this article, we relax this assumption – not supported by the data - and evaluate the ability of an otherwise standard life cycle model to account for the U.S. wealth inequality. The new feature of the model is that agents enter the economy with assets drawn from an initial distribution of assets, which is estimated using a non-parametric method applied to data from the Survey of Consumer Finances. We found that heterogeneity with respect to initial wealth is key for this class of models to replicate the data. According to our results, American inequality can be explained almost entirely by the fact that some individuals are lucky enough to be born into wealth, while others are born with few or no assets. |
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Ferreira, Pedro CavalcantiGomes, Diego Braz PereiraEscolas::EPGEFGV2015-08-11T16:51:20Z2015-08-11T16:51:20Z2015-07-070104-8910http://hdl.handle.net/10438/13886Life cycle general equilibrium models with heterogeneous agents have a very hard time reproducing the American wealth distribution. A common assumption made in this literature is that all young adults enter the economy with no initial assets. In this article, we relax this assumption – not supported by the data - and evaluate the ability of an otherwise standard life cycle model to account for the U.S. wealth inequality. The new feature of the model is that agents enter the economy with assets drawn from an initial distribution of assets, which is estimated using a non-parametric method applied to data from the Survey of Consumer Finances. We found that heterogeneity with respect to initial wealth is key for this class of models to replicate the data. According to our results, American inequality can be explained almost entirely by the fact that some individuals are lucky enough to be born into wealth, while others are born with few or no assets.engFundação Getulio Vargas. Escola de Pós-graduação em EconomiaEnsaios Econômicos;768Life Cycle Models, Heterogeneity of Initial Assets,and Wealth Inequalityinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleEconomiaEconomiareponame:Repositório Institucional do FGV (FGV Repositório Digital)instname:Fundação Getulio Vargas (FGV)instacron:FGVinfo:eu-repo/semantics/openAccessLICENSElicense.txtlicense.txttext/plain; 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dc.title.eng.fl_str_mv |
Life Cycle Models, Heterogeneity of Initial Assets,and Wealth Inequality |
title |
Life Cycle Models, Heterogeneity of Initial Assets,and Wealth Inequality |
spellingShingle |
Life Cycle Models, Heterogeneity of Initial Assets,and Wealth Inequality Ferreira, Pedro Cavalcanti Economia Economia |
title_short |
Life Cycle Models, Heterogeneity of Initial Assets,and Wealth Inequality |
title_full |
Life Cycle Models, Heterogeneity of Initial Assets,and Wealth Inequality |
title_fullStr |
Life Cycle Models, Heterogeneity of Initial Assets,and Wealth Inequality |
title_full_unstemmed |
Life Cycle Models, Heterogeneity of Initial Assets,and Wealth Inequality |
title_sort |
Life Cycle Models, Heterogeneity of Initial Assets,and Wealth Inequality |
author |
Ferreira, Pedro Cavalcanti |
author_facet |
Ferreira, Pedro Cavalcanti Gomes, Diego Braz Pereira |
author_role |
author |
author2 |
Gomes, Diego Braz Pereira |
author2_role |
author |
dc.contributor.unidadefgv.por.fl_str_mv |
Escolas::EPGE |
dc.contributor.affiliation.none.fl_str_mv |
FGV |
dc.contributor.author.fl_str_mv |
Ferreira, Pedro Cavalcanti Gomes, Diego Braz Pereira |
dc.subject.area.por.fl_str_mv |
Economia |
topic |
Economia Economia |
dc.subject.bibliodata.por.fl_str_mv |
Economia |
description |
Life cycle general equilibrium models with heterogeneous agents have a very hard time reproducing the American wealth distribution. A common assumption made in this literature is that all young adults enter the economy with no initial assets. In this article, we relax this assumption – not supported by the data - and evaluate the ability of an otherwise standard life cycle model to account for the U.S. wealth inequality. The new feature of the model is that agents enter the economy with assets drawn from an initial distribution of assets, which is estimated using a non-parametric method applied to data from the Survey of Consumer Finances. We found that heterogeneity with respect to initial wealth is key for this class of models to replicate the data. According to our results, American inequality can be explained almost entirely by the fact that some individuals are lucky enough to be born into wealth, while others are born with few or no assets. |
publishDate |
2015 |
dc.date.accessioned.fl_str_mv |
2015-08-11T16:51:20Z |
dc.date.available.fl_str_mv |
2015-08-11T16:51:20Z |
dc.date.issued.fl_str_mv |
2015-07-07 |
dc.type.status.fl_str_mv |
info:eu-repo/semantics/publishedVersion |
dc.type.driver.fl_str_mv |
info:eu-repo/semantics/article |
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article |
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dc.identifier.uri.fl_str_mv |
http://hdl.handle.net/10438/13886 |
dc.identifier.issn.none.fl_str_mv |
0104-8910 |
identifier_str_mv |
0104-8910 |
url |
http://hdl.handle.net/10438/13886 |
dc.language.iso.fl_str_mv |
eng |
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eng |
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Ensaios Econômicos;768 |
dc.rights.driver.fl_str_mv |
info:eu-repo/semantics/openAccess |
eu_rights_str_mv |
openAccess |
dc.publisher.none.fl_str_mv |
Fundação Getulio Vargas. Escola de Pós-graduação em Economia |
publisher.none.fl_str_mv |
Fundação Getulio Vargas. Escola de Pós-graduação em Economia |
dc.source.none.fl_str_mv |
reponame:Repositório Institucional do FGV (FGV Repositório Digital) instname:Fundação Getulio Vargas (FGV) instacron:FGV |
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