Asset bubbles in explaining top income shares

Minimum Distance Testing and Top Income Shares in Korea

We study Kolmogorov-Smirnov goodness of fit tests for evaluating distributional hypotheses where unknown parameters need to be fitted. Following work of Pollard (1979), our approach uses a Cramérvon Mises minimum distance estimator for parameter estimation. The asymptotic null distribution of the resulting test statistic is represented by invariance principle arguments as a functional of a Brow...

Top income shares in Canada: recent trends and policy implications

According to Canadian taxfiler data, over the last thirty years there has been a surge in the income shares of the top 1%, top 0.1% and top 0.01% of income recipients, even with longitudinal smoothing by individual using three- or five-year moving averages. Top shares fell in 2008 and 2009, but only by a fraction of the overall surge. Alberta, British Columbia, and Ontario have much more pronou...

Asset Bubbles and Overlapping Generations

Asset Float and Speculative Bubbles

We model the relationship between asset float (tradeable shares) and speculative bubbles. Investors with heterogeneous beliefs and short-sales constraints trade a stock with limited float because of insider lockups. A bubble arises as price overweighs optimists’ beliefs and investors anticipate the option to resell to those with even higher valuations. The bubble’s size depends on float as inve...

Volatile Top Income Shares in Switzerland? Reassessing the Evolution Between 1981 and 2010∗

We study the recent evolution of top incomes in Switzerland, analyzing both social security data on labor incomes and tax data on total income. The results show that in the last 20 years, the share of top incomes has risen, and the top 0.01% share even doubled, putting Switzerland similar to European countries for the top 1% group but closer to the U.S. for higher top incomes. However, top inco...