Income Inequality and Asset Prices under Redistributive Taxation

This paper was presented at the November 2015 Carnegie-Rochester-NYU Conference on Public Policy. The views in this paper are the responsibility of the authors, not the institutions they are affiliated with. We are grateful to the Brevan Howard Centre for Financial Analysis at Imperial College London, which we visited while writing this paper. For helpful comments, we are grateful to our discussant Philippe Mueller, our editors Marvin Goodfriend and Burton Hollifield, Doug Diamond, John Heaton, Marcin Kacperczyk, Stavros Panageas, Jacopo Ponticelli, Raman Uppal, Adrien Verdelhan, the audience at the 2016 Jackson Hole Finance Conference, and seminar participants at Bocconi, Chicago, Imperial, LBS, LSE, MIT, Torino, and York. We are also grateful to Menaka Hampole, Oscar Eskin, and Melissa Ortiz for excellent research assistance and to the Fama-Miller Center for Research in Finance and the Center for Research in Security Prices, both at Chicago Booth, for research support. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

• October 20, 2015