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Finance in a Time of Disruptive Growth

Author

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  • Nicolae B. Gârleanu
  • Stavros Panageas

Abstract

We propose a unified theory of asset price determination encompassing both “conventional” and “alternative” asset classes (private equity, real estate, etc.). The model features disruption of old by young firms and skewness in the distribution of innovative rents among the young innovators. The relative size of asset classes, the dynamics of rich investors’ wealth, and the returns of the various asset classes are jointly determined in equilibrium. Besides explaining the observed patterns of returns across asset classes, we analyze the theoretical properties of the most widely used performance-evaluation measure for alternative investments. We also provide connections between the growth of alternative investments, the dispersion of returns across investors, and the turnover inside the ranks of wealthy individuals.

Suggested Citation

  • Nicolae B. Gârleanu & Stavros Panageas, 2024. "Finance in a Time of Disruptive Growth," NBER Working Papers 32184, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:32184
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    Cited by:

    1. Perotti, Enrico & Döttling, Robin, 2017. "Secular Trends and Technological Progress," CEPR Discussion Papers 12519, C.E.P.R. Discussion Papers.
    2. Knesl, Jiří, 2023. "Automation and the displacement of labor by capital: Asset pricing theory and empirical evidence," Journal of Financial Economics, Elsevier, vol. 147(2), pages 271-296.
    3. Matthieu Gomez & Émilien Gouin‐Bonenfant, 2024. "Wealth Inequality in a Low Rate Environment," Econometrica, Econometric Society, vol. 92(1), pages 201-246, January.
    4. Benjamin Moll, 2020. "Comment on "Sources of US Wealth Inequality: Past, Present, and Future"," NBER Chapters, in: NBER Macroeconomics Annual 2020, volume 35, pages 468-479, National Bureau of Economic Research, Inc.
    5. Perotti, Enrico & Döttling, Robin, 2019. "Redistributive Growth," CEPR Discussion Papers 13984, C.E.P.R. Discussion Papers.
    6. Moll, Ben, 2020. "Comment on Hubmer, Krusell & Smith “Sources of U.S. wealth inequality: past, present, and future”," LSE Research Online Documents on Economics 107424, London School of Economics and Political Science, LSE Library.

    More about this item

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • O49 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Other

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