US inequality: Debt constraints or incomplete asset markets?

• 成果类型: Article
• 署名作者: Cordoba, Juan-Carlos
• 署名单位: Rice University
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2007.11.007
• 发表日期: 2008
• 页码: 350-364
• 关键词: Idiosyncratic risk; wealth distribution; debt constraints; incomplete markets; INEQUALITY

摘要

To examine the role of debt constraints and incomplete asset markets (lack of insurance markets) in explaining U.S. inequality. we run horse races between competing models. For a widely used model, we decompose inequality into its fundamental driving forces. The underlying source of inequality in all models is uninsurable idiosyncratic risk. Both debt constraints and incomplete asset markets are needed to account for inequality, but asset market incompleteness is the key friction. It better accounts for the concentration and dispersion of wealth, and is the most costly friction in terms of welfare. Tight debt constraints are important for explaining the lower tail of the wealth distribution. (C) 2007 Elsevier B.V. All rights reserved.