Taxation, Transfer Income and Stock Market Participation

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review

Abstrakt

This article studies the impact of a redistributive tax system on consumption, portfolio decisions, and asset prices in a dynamic general equilibrium model. Poorer agents, which receive more in transfers than they pay in taxes, optimally reduce their exposure to equity, because the transfer income they receive is subject to stock market risk. This article thus provides a novel explanation for the low stock market participation rates of poorer investors.
OriginalsprogEngelsk
TidsskriftReview of Finance
Vol/bind19
Udgave nummer2
Sider (fra-til)823-863
Antal sider41
ISSN1572-3097
DOI
StatusUdgivet - 2015

Citationsformater