Job Market Paper

Wealth, Returns, and Taxation: A Tale of Two Dependencies, Job Market Paper, with Philipp Wangner (TSE).

  • Online appendix, SSRN version.

  • Abstract: We study wealth redistribution in a framework where individual portfolio choices and associated returns are correlated with wealth through: (i) type dependence, which reflects that investment skills drive return differences and (ii) scale dependence, which captures that wealth itself triggers returns. Using an analytical framework, we argue that several common heterogeneous agent models can be understood through the lens of a type and scale dependence representation. We show that four key statistics characterize the macroeconomic and welfare implications of wealth taxation: the right tail of the wealth distribution, the degree of scale and type dependence, and the extent to which returns reflect investment productivity. We then build a quantitative model calibrated using micro US data and find an optimal marginal wealth tax rate of 0.8 percent above an exemption level of $550K. The result is driven by two opposing forces. Under scale dependence, productivity and wealth accumulation decrease with the tax, as risk-taking depends on wealth. Under type dependence, a higher wealth tax reinforces the selection of skilled investors at the top and improves productivity. Finally, the marginal wealth tax only slightly increases when returns partially reflect rent motives, as both forces almost quantitatively offset each other.

Working Papers

Value Added and Productivity Linkages Across Countries, with François de Soyres (FRB), R&R American Economic Journal: Macroeconomics.

  • Online appendix, Slides, VoxEU Column, FEDS Note.

  • In short: Traditional international real business cycle models produce a weak relationship between trade and cross-country real GDP correlations, contradicting widespread empirical findings. We solve this puzzle by showing that whenever imported input’s base period price does not reflect their marginal revenue product (e.g. due to markups or love of variety), real GDP movements become mechanically linked to fluctuations in imported inputs.

Global Trade and GDP Co-movement, with François de Soyres (FRB), R&R Journal of Economic Dynamics and Control.

  • In short: This paper provides new empirical findings regarding the relationship between trade and cross-country GDP correlation using a large sample of countries. We introduce two notions of trade linkages: (i) direct bilateral trade index and (ii) common exposure to "third" countries capturing the role of trade networks.

Gross Labor Market Flows, Entrepreneurship, and the Role of Unemployment Insurance, with Sumudu Kankanamge (TSE), December 2021.

  • Online appendix, Slides. Find an old related policy paper here.

  • In short: We document that the selection into entrepreneurship is highly responsive to variations in unemployment insurance (UI) generosity. We develop an occupational choice model of employment, unemployment, and entrepreneurship and show that changes in the relative riskiness between occupations is key to understand this high responsiveness.

Buying and Selling Entrepreneurial Assets, with Sumudu Kankanamge (TSE), June 2020.

  • TSE Working paper. An old version with application on the aging of entrepreneurs: SED 2019 Meeting, Slides.
  • In short: How are the options to buy and sell a business relevant for entrepreneurs? We introduce a theory of entrepreneurial assets transfer consistent with empirical evidence and quantify the importance of the market for businesses in the US.

Work In Progress

Housing-market Matching, Regional Mobility and Unemployment Insurance, with Christophe Bruneel (KU-Leuven), Slides.

    • Use a unique dataset comprising the whole universe of US housing transactions (105 million of housing units). Information on history of sales and price change, property tax change, and housing characteristics.

Facts on Business Transfers: Liquidity and Price Dynamics, with Sumudu Kankanamge (TSE).

    • ~100000 Business transactions (Small and Middle Sized Entreprises), with information in panel on reasons to sell, asking and selling price, capital (tangible & intangible), firm age.