Tesi etd-05222024-205904
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Type of thesis
Corso Ordinario Secondo Livello
Author
DALLE LUCHE, MATTEO
URN
etd-05222024-205904
Title
Heterogeneous returns on wealth in the Italian economy: the distributional consequences of differential households’ savings
and investment choices
Structure
Classe Scienze Sociali
Course
SCIENZE ECONOMICHE E MANAGERIALI - SCIENZE ECONOMICHE E MANAGERIALI
Committee
Tutor Prof. FAGIOLO, GIORGIO
Relatore Prof. ROVENTINI, ANDREA
Presidente Prof. IRALDO, FABIO
Membro Prof.ssa CHIAROMONTE, FRANCESCA
Membro Prof.ssa ANNUNZIATA, ELEONORA
Membro Prof. BELLINI, NICOLA
Relatore Prof. ROVENTINI, ANDREA
Presidente Prof. IRALDO, FABIO
Membro Prof.ssa CHIAROMONTE, FRANCESCA
Membro Prof.ssa ANNUNZIATA, ELEONORA
Membro Prof. BELLINI, NICOLA
Keywords
- capital income inequality
- wealth distribution
- household finance
- financial crises
Exam session start date
14/06/2024;
Availability
completa
Abstract
The distribution of rates of return on personal wealth and how they contribute in shaping capital income<br> inequality is an issue of recent investigation in the economic literature. This work constitutes an attempt<br> to conservatively estimate rates of return on wealth within the households sector, to be used to update<br> the current evidence over the distribution of capital income in Italy on augmented survey data spanning<br> between 2004 and 2015.<br> Pivoting on the capital stocks capitalization data provided by Jord` a et al. (2019) Macrohistory lab dataset,<br> we infer that the relation between wealth and returns on wealth in Italy is monotone increasing and<br> convex in most years, namely, those that were not characterized by the significantly negative financial<br> turbulences the country has gone through. If one excludes these periods of extremely severe downturns<br> in financial markets, the top groups in the Italian wealth distribution prove to earn excess returns on<br> f<br> inancial assets that that range from 40% to 60% greater on average than those earned by the bottom<br> 90% of the wealth distribution. This effect is to be imputed to two main facts. First, interest rates on<br> net wealth are predominantly negative within the bottom two deciles in the Italian economy, due to debt<br> exposure within poorest groups naturally creating divergence between the top and the bottom half of<br> the distribution. Second, financial portfolios at the bottom ensure lower yields on financial wealth, thus<br> signaling worse investment opportunities. Returns at the top of the distribution are consistently more<br> volatile, though their expected performance over the 12 years considered is always higher in periods<br> of ordinary financial markets circumstances. An important role in the Italian economy is played by<br> returns on housing wealth: the reliance of great chunks of the middle of the wealth distribution on real<br> activities, making up around 60% of wealth of mid groups, makes their returns on wealth more stable<br> and considerably less affected by financial crises. Nonetheless, this is part of the reason as to why the<br> underdeveloment of Italian financial markets generate a structural increasing relation between wealth<br> and returns at the macroeconomic level, as riskier financial assets do secure higher returns on average,<br> which benefit the rich for the most part.<br> Thanks to the wide coverage of Macrohistory data, this methodology is replicable for other countries to<br> gather insights over household sector capital income distribution.<br>
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