Capital is back: wealth-income ratios in rich countries 1700-2010
Thomas Piketty () and
Gabriel Zucman ()
LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library
How do aggregate wealth-to-income ratios evolve in the long run and why? We address this question using 1970–2010 national balance sheets recently compiled in the top eight developed economies. For the United States, United Kingdom, Germany, and France, we are able to extend our analysis as far back as 1700. We find in every country a gradual rise` of wealth-income ratios in recent decades, from about 200–300% in 1970 to 400–600% in 2010. In effect, today’s ratios appear to be returning to the high values observed in Europe in the eighteenth and nineteenth centuries (600–700%). This can be explained by a long-run asset price recovery (itself driven by changes in capital policies since the world wars) and by the slowdown of productivity and population growth, in line with the β=sgβ=sg Harrod-Domar-Solow formula. That is, for a given net saving rate s = 10%, the long-run wealth-income ratio β is about 300% if g = 3% and 600% if g = 1.5%. Our results have implications for capital taxation and regulation and shed new light on the changing nature of wealth, the shape of the production function, and the rise of capital shares.
JEL-codes: D30 D31 D33 E10 E20 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (189) Track citations by RSS feed
Published in Quarterly Journal of Economics, 2014, 129(3), pp. 1255-1310. ISSN: 0033-5533
Downloads: (external link)
http://eprints.lse.ac.uk/66106/ Open access version. (application/pdf)
Journal Article: Capital is Back: Wealth-Income Ratios in Rich Countries 1700–2010 (2014)
Working Paper: Capital is Back: Wealth-Income Ratios in Rich Countries 1700–2010 (2014)
Working Paper: Capital is Back: Wealth-Income Ratios in Rich Countries, 1700-2010 (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:66106
Access Statistics for this paper
More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().