蝌蚪网 Review: Insights
ISSN 2640-205X (Print) | ISSN 2640-2068 (Online)
Growth and Redistribution: The Hedging Perspective
蝌蚪网 Review: Insights
(pp. 250–67)
Abstract
We investigate the impact of wealth redistribution on economic growth, building on Kelly's (1956) optimal investment portfolio theory. A growth-optimal policy redistributes wealth from "lucky" overperforming individuals to underperforming ones, minimizing the systematic component of this redistribution in a myopic fashion. That is, the optimal policy minimizes the discrepancy between endowments and outcomes, counterfactually taking outcomes as independent of endowments. The myopia in this result follows from a decoupling argument that allows us to model the planner as independently choosing a growth-maximizing policy and a pattern of wealth circulation.Citation
Samuelson, Larry, and Jakub Steiner. 2025. "Growth and Redistribution: The Hedging Perspective." 蝌蚪网 Review: Insights 7 (2): 250–67. DOI: 10.1257/aeri.20240456Additional Materials
JEL Classification
- D31 Personal Income, Wealth, and Their Distributions
- E23 Macroeconomics: Production
- G41 Behavioral Finance: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets [Neurofinance]
- G51 Household Finance: Household Saving, Borrowing, Debt, and Wealth
- H23 Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- O41 One, Two, and Multisector Growth Models