This paper studies 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 returns and (ii) scale dependence, which captures that wealth itself triggers...

This paper proposes a representative agent habit-formation model where preferences are defined for both luxury goods and basic goods. The model matches the equity risk premium, risk-free rate, and volatilities. From the intratemporal first-order condition, one can substitute out basic good...