The well-documented positive correlation between income risk and wealth was interpreted as evidence for high amounts of … precautionary wealth in various studies. However, the large estimates emerged from pooling non-entrepreneurs and entrepreneurs … private wealth balance sheets. Entrepreneurs, who face high income risk, hold more wealth than employees, but it is shown that …

permanent income shocks helps our model to explain a substantial part of the large degree of empirical wealth heterogeneity that …

Using new micro data on household wealth from fifteen European countries, the Household Finance and Consumption Survey …, we first document the substantial cross-country variation in how various measures of wealth are distributed across … permanent income shocks we then study how cross-country differences in the wealth distribution and household income dynamics …

dynamics. When the model is modified in a way that permits it to match empirical measures of wealth inequality in the U.S., we … how the shock is distributed across categories of households (e.g., low-wealth versus high-wealth households). …

degree of heterogeneity in household preferences or beliefs is sufficient to match empirical measures of wealth inequality in … macroeconomic models (even ones including some heterogeneity). The high MPC arises because many consumers hold little wealth despite … on how the shock is distributed across households (depending, e.g., on their wealth, or employment status). …