Research
Current Research Projects
Publications
Birkner, M., Scheuer, N. & Wälde, K. - The dynamics of Pareto distributed wealth in a small open economy.
A Discussion Paper version can be found here.
Abstract: We study a small open economy displaying Pareto-distributed wealth resulting from random death. The government runs a distribution scheme on inheritance. We present the mathematical background that allows to study the dynamics of means. We end up with ordinary differential equations for the mean of age and of individual and government wealth. We also study distributional dynamics analytically. Starting from any distribution of age and wealth, the aggregate distribution converges, both on a transition path towards a steady state and on a transition path towards balanced growth, to an exponential distribution of age and a Pareto-distribution of wealth. The findings are illustrated for different distribution schemes.
Work in Progress
-The Impact of Bequest Taxation on Wealth Inequality - Theory and Evidence (Joint with Berenice Anne Neumann)
A Discussion Paper version can be found here.
Abstract: We study the effect of bequests and their taxation on wealth inequality. We allow for random death and birth in a continuous-time, dynastic framework. Individuals behave optimally and accumulate wealth over their lifetime. Bequests above a tax exemption threshold are taxed according to a fixed rate. We derive a stochastic differential equation modeling dynastic wealth and obtain an analytical expression for the coefficient of variation. By calibrating our model to German wealth data, we utilize these analytical results to project empirical wealth inequality across various bequest tax rates and tax exemption thresholds. Most notably, our results indicate that a combination of a high tax exemption threshold paired with a high bequest tax rate reduces wealth inequality strongest when considering revenue-neutral alterations.
-Do people choose what makes them happy and how do they decide at all? A theoretical inquiry
A Discussion Paper version can be found here or here. A video presentation can be found here.
Abstract: We develop a theoretical model that jointly explains optimal choices and happiness. We work with constant elasticity of substitution functions or utility and happiness. Employing a choice framework, individuals are confronted with two options. When there exists a trade-off, we determine parametric conditions for which individual happiness and utility coincide as well as oppose each other. Comparing the empirical evidence of Benjamin et al. (2012), our model can explain three out of four possible happiness-utility combinations. Regarding how individuals actually decide, our findings suggest that this is partly random. This explanation accounts for the remaining 11.2 % of individuals.
-Economic inequalities caused by Covid-19 and associated public health measures (Joint with Klaus Wälde)
A video presentation can be found here. A Discussion Paper follows soon.
Abstract: We study health in an economic framework with employment and leisure decisions by households, who differ in their occupational background. Introducing health risk, consumption and leisure some choices alter unambiguously, some are contingent on an interplay between effects and some remain ambiguous. A closed-form general equilibrium prevails. Given an economy-wide health risk, an increase in either activity has ambiguous effects, opposed to when specifying on one channel only, where unambiguous implications emerge. We fi nd that increasing leisure risk has different implications depending on whether all activities bear risk or not. We fi nd that even when individuals face the same leisure risk, they react differently as a result of their occupation.