The Distribution of Wealth and Fiscal Policy in Economies with Finitely Lived Agents

@article{Benhabib2008TheDO,
  title={The Distribution of Wealth and Fiscal Policy in Economies with Finitely Lived Agents},
  author={Jess Benhabib and Alberto Bisin},
  journal={NBER Working Paper Series},
  year={2008}
}
We study the dynamics of the distribution of wealth in an overlapping generation economy with finitely lived agents and intergenerational transmission of wealth. Financial markets are incomplete, exposing agents to both labor and capital income risk. We show that the stationary wealth distribution is a Pareto distribution in the right tail and that it is capital income risk, rather than labor income, that drives the properties of the right tail of the wealth distribution. We also study… 
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