We propose a theory of indebted demand, capturing the idea that large debt burdens by households and governments lower … aggregate demand, and thus natural interest rates. At the core of the theory is the simple yet under-appreciated observation … a two-agent overlapping-generations model, we find that recent trends in income inequality and financial liberalization …

among the wealthy, while owner-occupied housing is crucial for middle groups, so higher stock prices raise wealth inequality … while house price increases do the opposite. Inheritances exacerbate absolute wealth inequality but reduce relative … inequality. Wealth inequality declined in advanced Western countries during the first half of the 20th century, then stabilized …

heterogeneity to quantify their effects on wealth inequality. The results show that with the available estimates of the risk … aversion distribution from PSID data the model can match the observed degree of wealth inequality in the U.S., accounting for …