Cyclical Transactions and Wealth Inequality
In: FRB of Chicago Working Paper No. 2022-05
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In: FRB of Chicago Working Paper No. 2022-05
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Wealth is distributed more unevenly than income, and one contributing factor might be that richer households earn higher portfolio returns. I uncover one channel that causes portfolio returns to be increasing in wealth: Poorer households consistently buy risky assets in booms-when expected returns are low-and sell after a bust-when expected returns are high. Although time-varying expected returns are a robust empirical fact, theories are ambiguous on whether poorer or richer households engage in such cyclical trading patterns. I estimate the trading patterns for households across wealth levels, in the US housing market for 1988-2013. I interact housing ownership patterns from deeds records with household-level wealth, which I infer from merging owners' surnames with their name-based income in the 1940 full Census. The estimated dispersion in expected returns from this "buy-high-sell-low" channel is large: The interquartile-range difference is 60 basis points per year. The channel predicts that geographies with historically higher volatility will feature more wealth inequality than income inequality: I verify this implication in the data. These results suggest that a government policy intended to boost poorer households' wealth via homeownership can backfire if it ignores the status of house prices.
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In: FRB of Chicago Working Paper No. 2021-07
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In: FRB of Chicago Working Paper No. WP-2021-12
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In: JPUBE-D-23-01041
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In: Olin Business School Center for Finance & Accounting Research Paper No. 2023/12
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In: AEA Papers and Proceedings, 2024
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In: George J. Stigler Center for the Study of the Economy & the State Working Paper No. 325
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In: FRB of Chicago Working Paper No. 2023-15
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In: NBER Working Paper No. w21474
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In: Reproductive sciences: RS : the official journal of the Society for Reproductive Investigation, Band 27, Heft 4, S. 1086-1086
ISSN: 1933-7205
In: Reproductive sciences: RS : the official journal of the Society for Reproductive Investigation, Band 27, Heft 1, S. 29-38
ISSN: 1933-7205