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Asset-Price Redistribution

Author

Listed:
  • Andreas Fagereng

    (BI Norwegian Business School [Oslo])

  • Matthieu Gomez

    (Columbia University [New York])

  • Émilien Gouin-Bonenfant

    (Columbia University [New York])

  • Martin Holm

    (UiO - University of Oslo)

  • Benjamin Moll

    (LSE - London School of Economics and Political Science)

  • Gisle Natvik

    (BI Norwegian Business School [Oslo])

Abstract
Over the last several decades, there has been a large increase in asset valuations across many asset classes. While these rising valuations had important effects on the distribution of wealth, little is known regarding their effect on the distribution of welfare. To make progress on this question, we develop a sufficient statistic for the money-metric welfare ef- fect of deviations in asset valuations (i.e., changes in asset prices keeping cash flows fixed). This welfare effect depends on the present value of an individual's net asset sales rather than asset holdings: higher asset valuations benefit prospective sellers and harm prospective buyers. We estimate this quantity using panel microdata covering the universe of financial transactions in Norway from 1994 to 2019. We find that the rise in asset valuations had large redistributive effects: it redistributed from the young towards the old and from the poor towards the wealthy.

Suggested Citation

  • Andreas Fagereng & Matthieu Gomez & Émilien Gouin-Bonenfant & Martin Holm & Benjamin Moll & Gisle Natvik, 2024. "Asset-Price Redistribution," World Inequality Lab Working Papers halshs-04563909, HAL.
    • Handle: RePEc:hal:wilwps:halshs-04563909
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-04563909
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