Asset-price redistribution

Andreas Fagereng, Matthieu Gomez, Emilien Gouin-Bonenfant, Martin Holm, Benjamin Moll and Gisle Natvik

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Asset valuations across many asset classes have increased substantially over the past several decades. While these rising valuations had important effects on the distribution of wealth, little is known regarding their redistributive effects in terms of welfare. To make progress on this question, we develop a sufficient statistic for the money-metric welfare gain of deviations in asset valuations. This welfare gain 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 further demonstrate how to adapt our baseline statistic to account for important considerations, such as incomplete markets and collateral constraints. We find that the rise in asset valuations had large redistributive effects: it redistributed from the young to the old and from the poor to the wealthy.

JEL-codes: D31 D63 G12 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2025-09-19
New Economics Papers: this item is included in nep-fmk
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Published in Journal of Political Economy, 19, September, 2025. ISSN: 0022-3808

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:129496

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