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Journal Article
1960s Interstate Highways and Homeowner Wealth Distribution
This article studies house-level real estate wealth distribution changes nearby a major interstate highway, comparing values before the announcement of the highway's construction (1940) with those during and shortly after the construction period (1961-74). We also develop Lorenz curves to examine the distribution of housing wealth among various demographic groups of homeowners. First, we find that properties at least a half-mile away from I-84 experienced statistically significant appreciation (on average). Houses further away, in 0.25 mile increments up to 1.25 miles, appreciated less. Our ...
Briefing
A More Comprehensive Measure of the Black-White Wealth Gap
In this article, we apply a simple graphical device — the plot of the relative rank distribution — to summarize the Black-White wealth gap. We also introduce the relative rank Gini coefficient — an analog to the standard Gini coefficient — as a summary measure of rank inequality. We find that the rank wealth gap is widest in the middle of the wealth distribution. Black-White rank wealth gaps are higher among college graduates than among other education groups. Households with young or retired heads have higher rank gaps than middle-aged households. We caution that rank gaps are not ...
Working Paper
Wealth distribution with state-dependent risk aversion
Working Paper
Should Capital Be Taxed?
We design an infinite-horizon heterogeneous-agents and incomplete-markets model to demonstrate analytically that in the absence of any redistributional effects of government policies, optimal capital tax is zero despite capital overaccumulation under precautionary savings and borrowing constraints. Our result indicates that public debt is a better tool than capital taxation to restore aggregate productive efficiency.
Working Paper
Monetary Policy and Racial Inequality
This paper aims at an improved understanding of the relationship between monetary policy and racial inequality. We investigate the distributional effects of monetary policy in a unified framework, linking monetary policy shocks both to earnings and wealth differentials between black and white households. Specifically, we show that, although a more accommodative monetary policy increases employment of black households more than white households, the overall effects are small. At the same time, an accommodative monetary policy shock exacerbates the wealth difference between black and white ...
Journal Article
Spotlight on Research: The Distributional Impact of Negative Equity
The fallout from the recent meltdown in the housing market continues to afflict many homeowners today. A great deal of attention has been focused on the debilitating effects of a rise in foreclosures and falling house prices that accompanied the market downturn. The depressing effect of foreclosures on house prices has presented several challenges to homeowners. Declining home values have resulted in a number of homeowners owing more on their mortgage than their home is worth. Thus, the homeowners are saddled with negative equity, which is commonly referred to as ?being under water.? ...
Working Paper
Introducing the Distributional Financial Accounts of the United States
This paper describes the construction of the Distributional Financial Accounts (DFAs), a new dataset containing quarterly estimates of the distribution of U.S. household wealth since 1989, and provides the first look at the resulting data. The DFAs build on two existing Federal Reserve Board statistical products --- quarterly aggregate measures of household wealth from the Financial Accounts of the United States and triennial wealth distribution measures from the Survey of Consumer Finances --- to incorporate distributional information into a national accounting framework. The DFAs complement ...
Working Paper
Estimating the marginal propensity to consume using the distributions of income, consumption and wealth
Recent studies of economic inequality almost always separately examine income, consumption, and wealth inequality and, hence, miss the important synergy among the three measures explicit in the life-cycle budget constraint. Using Panel Study of Income Dynamics data from 1999 through 2013, we examine whether these changes are more dramatic at higher or lower levels of wealth and find that the marginal propensity to consume is lower at higher wealth quintiles. This suggests that low-wealth households cannot smooth consumption as much as other households do, which further implies that increasing ...
Working Paper
A Wealth of Information: Augmenting the Survey of Consumer Finances to Characterize the Full U.S. Wealth Distribution
We use the Survey of Consumer Finances (SCF) to advance U.S. wealth analysis along several dimensions. We develop a comprehensive framework that modifies the SCF to recover the wealth distribution over families, tax units, and individuals from 1989 to 2019. We show that, by ignoring unequal holdings within families, existing estimates considerably understate U.S. inequality across individuals. We find wealth concentration rose through the recent economic recovery, which differs from leading models that capitalize income into wealth even after aligning conceptual differences. We illustrate ...
Working Paper
Should Capital Be Taxed?
We design an infinite-horizon heterogeneous-agents and incomplete-markets model to demonstrate analytically that in the absence of any redistributional effects of government policies, optimal capital tax is zero despite capital overaccumulation under precautionary savings and borrowing constraints. Our result indicates that public debt is a better tool than capital taxation to restore aggregate productive efficiency.