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The Wealth Distribution And The Demand For Status Author info | Abstract | Publisher info | Download info | Related research | Statistics Luo, Yulei
Young, Eric R.
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Standard economic theories of asset markets assume that assets are valued entirely for the consumption streams they can finance. This paper examines the introduction of the demand for status (as a function of wealth) into a model of uninsurable idiosyncratic risk spirit of capitalism soc ) assumption. We find that soc preferences lead to less inequality in wealth; placing wealth into the utility function leads to a shrinking wealth distribution. The drop in wealth concentration is smaller if the utility function implies status is a luxury good, but no parametrization leads to higher wealth Gini coefficients than the benchmark case. We then consider the consequences of revenue-neutral tax reforms with and without soc preferences, finding that they make little difference for this policy experiment.
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Article provided by Cambridge University Press in its journal Macroeconomic Dynamics .
Volume (Year): 13 (2009)
Issue (Month): S1 (May)
Pages: 1-30
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Handle: RePEc:cup:macdyn:v:13:y:2009:i:s1:p:1-30_08Contact details of provider: Postal: The Edinburgh Building, Shaftesbury Road, Cambridge CB2 2RU UK Fax: +44 (0)1223 325150 Email: Web page: http://journals.cambridge.org/jid_MDY
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