6533b7d6fe1ef96bd1266efa
RESEARCH PRODUCT
Does a global wealth tax reduce inequality? When Piketty meets Mankiw
Hoang KhieuTien Van Nguyensubject
Rate of returnConsumption (economics)Economics and EconometricsInequalitymedia_common.quotation_subject05 social sciencesSmall open economyMonetary economicsTax rate0502 economics and businessEconomicsGrowth rate050207 economicsWealth tax050205 econometrics media_commondescription
Abstract We investigate the effects of a wealth tax on consumption and wealth inequality in a standard small open economy model featuring labour income heterogeneity. We show that consumption inequality and wealth inequality are identical in the long run if consumption growth exceeds output growth. Under this condition, the wealth tax reduces long run inequality under two additional conditions. First, the difference between the rate of return on wealth and the growth rate, r − g , is higher than a positive threshold. Second, the tax rate is lower than a cap which rises in r − g but decreases in labour income heterogeneity.
| year | journal | country | edition | language |
|---|---|---|---|---|
| 2020-06-01 | Research in Economics |