Centro Atlántico de Estudios Ríos Pérez
Publications of CAERP members
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Desigualdad, ¿Qué sabemos? José Víctor Ríos
Rull. In this article (in
Spanish) I review the state of the art of our knowledge of what
factors account wealth and income inequality among
households. Specifically, I claim how uninsurable shocks to income
can by themselves account for the observed wealth
inequality. Investigaciones Económicas. Vol. XXVI
(2), 2002, 221-254.
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Accounting for Earnings and Wealth Inequality August 2002
version. Joint with Ana Casta~neda, Javier Diaz-Gimenez y
José Víctor Ríos Rull. We show that a theory of earnings and wealth
inequality based on the optimal choices of ex-ante identical
households who face uninsured idiosyncratic shocks to their
endowments of e.ciency labor units accounts for the U.S. earnings
and wealth inequality almost exactly. Relative to previous work, we
make three major changes to the way in which this basic theory is
implemented: (i) we mix the main features of the dynastic and the
life-cycle abstractions, that is, we assume that our households are
altruistic, and that they go through the life-cycle stages of
working-age and of retirement; (ii) we model explicitly some of the
quantitative properties of the U.S. social security system; and
(iii) we calibrate our model economies to the Lorenz curves of
U.S. earnings and wealth as reported by the 1992 Survey of Consumer
Finances. Furthermore, our theory succeeds in accounting for the
observed earnings and wealth inequality in spite of the
disincentives created by the mildly progressive U.S. income and
estate tax systems, that are additional explicit features of our
model economies. Forthcoming, Journal of Political
Economy.
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Updated Facts on the U.S. Distributions of Earnings, Income and
Wealth. Santiago Budria, Javier Diaz-Gimenez, Vincenzo
Quadrini, y José Víctor Ríos Rull. We provide some facts about inequality
based on the most recent data available (1998 SCF).
Federal Reserve Bank of Minneapolis Quarterly Review, Summer
2002, Vol. 26, No. 3, pp. 2-35.
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Default
and Aggregate Fluctuations in Storage Economies. Makoto
Nakajima y José Víctor Ríos Rull. In this paper we extend Chatterjee, Corbae,
Nakajma and Rios-Rull (2001) to include aggregate real shocks to
economic activity. The model, that includes agents that borrow and
lend, and that has endogenous default and credit limits, allows us
to explore the extent to which aggregate events are amplified or
smoothed via the mechanism of household bankruptcy filings. In the
model agents are subject to shocks to earnings opportunities, to
preferences and to their asset position and borrow and lend to
smooth consumption. On occasion, the realization of the shocks are
bad enough that agents take advantage of the opportunities provided
by the U.S. Bankruptcy Code and file for bankruptcy which wipes out
their debt at the expense of both being banned from borrowing for a
certain amount of time and of incurring in transaction costs. The
incentives to default are time varying and depend on general
economic conditions. The model is quantitative in the sense that
its fundamental parameters are estimated using U.S. data, and the
model can replicate the aggregate conditions of the U.S. economy. We
show that the model accounts for the very high number of
bankruptcies in the last few years, and report the statistics
produced by the model economies with various aggregate shocks. Based
on the outputs, we analyze the reaction of households to various
aggregate real shocks, and discuss the aggregate implications of the
reaction and the direction that the model might be further extended
to. Forthcoming in a volume in honor of Herbert
Scarf.
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College Attainment of Women. José Víctor
Ríos Rull y Virginia Sanchez Marcos. Up to the late seventies, the Sex College
Attainment Ratio (SCAR) or ratio of college attainment between men
and women was about 1.6. Assortative mating within education groups
in marriages is strong enough in the U.S. to prevent accounting for
the SCAR feature based on males’ higher earnings. We document the
puzzling nature of the SCAR, and we explore various theories to
account for it. Our main finding is that if parents’ wellbeing is
affect by the number of grandchildren, gender differences in the
steepness of the negative relation between educational attainment
and number of children provides the best theory in accounting for
the SCAR. Review of Economic Dynamics Volume 5,
Issue 4, Pages 965-998 (October 2002).
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Implementing the 35 Hour Workweek by Means of Overtime Taxation
Victoria Osuna y José Víctor Ríos Rull. In this paper we study the
implications of taxing overtime work in order to reduce the
workweek. To this purpose we study the roles played by team work,
commuting costs and idiosyncratic output risk in determining the
choice of the workweek. In order to obtain reliable estimates of the
consequences of our policy experiment, we calibrate our model
economy to the substitutability between overtime and employment
using business cycle information. We find that a tax-rate of 12% of
overtime wages implements the desired reduction of the workweek form
40 to 35 hours (12.5%). We also find that this tax change increases
employment by 6.7% and reduces output and productivity by 10.2 and
4.1%, respectively. We also study a model economy with
cross-sectional variations in the workweek that arise from
plant-specific output risk and we find that in this model economy
the taxrates needed to achieve the same workweek reduction are
significantly larger. Finally, we find that taxing overtime dampens
the business cycle fluctuations and that its welfare costs seem to
be very large. Forthcoming, Review of Economic
Dynamics.
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Habit
Formation: Implications for the Wealth Distribution Antonia
Diaz, Josep Pijoan-Mas y José Víctor Ríos Rull.
We study the role of habit
formation in shaping the amount of precautionary savings and the
wealth distribution in heterogeneous agents model economies with
idiosyncratic uncertainty. We adjust preferences to equate the
Intertemporal Elasticity of Substitution in all model economies. We
find that habit formation brings a hefty increase in precautionary
savings and very mild reductions in the coe±cient of variation and
in the Gini index of wealth. These findings hold for both persistent
and non persistent habits, with the effects of the former being much
larger. Forthcoming, Journal of Monetary
Economics.
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Time-Consistent Optimal Fiscal Policy. Paul Klein y José
Víctor Ríos Rull.
This paper studies the properties of optimal fiscal policy in a
stochastic growth model when the government cannot commit itself
beyond the next period's capital income tax rate. We find that the
properties of optimal fiscal policy in this case differ dramatically
from those of the full commitment solution. In particular, (i)
capital income tax rates are very high (65% on average versus close
to zero on average under full commitment), (ii) labor income taxes
are rather low on average (about 12% versus a value of around 31%
under full commitment), and (iii) labor income taxes are volatile
(in some cases its coefficient of variation is higher than that of
the capital income tax rate), while under full commitment their
standard deviations are essentially zero. Forthcoming,
International Economic Review.
Last modified: Wed Dec 31 21:33:43 Eastern Standard Time 2003