Niet beschikbaar in het Nederlands
Xitong Hui
- 8 December 2025
- WORKING PAPER SERIES - No. 3162Details
- Abstract
- Can rising asset prices reduce wealth inequality? This paper builds a continuous-time heterogeneous-agent general equilibrium in which entrepreneurs hold risky private capital and traditional savers hold safe assets. Safe-asset expansions—via financial innovation, public debt, or a stable equity bubble—operate through a single pass-through: they lower entrepreneurs’ undiversified risk exposure, compress risk premia, and raise the interest rate. This slows entrepreneurial wealth accumulation and redistributes wealth toward traditional savers, so inequality falls even as risky asset valuations rise. Savers gain unambiguously. Entrepreneurs’ welfare is state-dependent: when their wealth share is low, they prefer a higher risk premium and lose from safe-asset expansions; once sufficiently wealthy, they prefer a higher interest rate that protects a larger wealth base and gain.
- JEL Code
- D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
G12 : Financial Economics→General Financial Markets→Asset Pricing, Trading Volume, Bond Interest Rates
E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy - Network
- ECB Lamfalussy Fellowship Programme