Asset-Price Redistribution" with Andreas Fagereng (BI),  Matthieu Gomez  (Columbia),  Émilien Gouin-Bonenfant (Columbia), Martin Holm (University of Oslo), and  Gisle Natvik (BI)

Abstract:

Over the past forty years, there has been a sharp increase in valuations across many asset classes. These rising valuations had important effects on the distribution of wealth. However, little is known regarding their effect on the distribution of welfare. To make progress on this question, we derive a sufficient statistic for the welfare effect of a rise in asset prices that depends on the present value of an individual’s net asset sales. We then estimate this quantity using panel microdata covering the universe of Norwegian financial transactions from 1994 to 2015. We find that rising asset valuations had large redistributive effects: they redistributed welfare from the young towards the old, and from the poor towards the wealthy.