2019 Fiscal Year Research-status Report
The macroeconomic implications of a preference for wealth
| Project/Area Number |
19K23230
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| Research Institution | Sophia University |
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Principal Investigator |
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| Project Period (FY) |
2019-08-30 – 2021-03-31
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| Keywords | Wealth preference / Macroeconomics / Public debt / Inequality / Secular stagnation / Underemployment |
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| Outline of Annual Research Achievements |
My research on the implications of the preference for wealth has made important progress over the last year.
In a joint project, we show that public debt can become sustainable above the level suggested by the standard analysis when individuals have a strong desire to save. We plan to submit this paper within the next months.
Relatedly, we analyze the implications of such a setup for inequality and show that the equilibrium wealth distribution of our model becomes path-dependent, even in the absence of income inequality. This is a novel finding. We made good progress on this work during my visit to my co-author in Paris.
Finally, our project on underemployment has also made significant progress in explaining the increase in part-time and non-regular employment, particularly in Japan.
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| Current Status of Research Progress |
Current Status of Research Progress
2: Research has progressed on the whole more than it was originally planned.
Reason
Initially, progress on my research went less smoothly than planned for several reasons, including a lack of equipment and teaching requirements. As I just started my first faculty position at a university, these preparations were quite extensive and took more time than initially planned, particularly during the spring semester.
However, progess has considerably improved since the summer break and is progressing rather smoothly since then. This is due to improved equipment (particularly the powerful Surface laptop allows running our simulations with Matlab more smoothly) and a more intensive exchange with my co-authors. Particulary, we made substantial progress with our projects during the visit of our co-author from Paris to Japan last fall and my short-term visit to Paris in early March.
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| Strategy for Future Research Activity |
Despite the progress outlined above, there is still a lot of work to be done with these projects. While we plan to submit the first paper within the next months, the second and third projects still require substantial extensions and revisions. Unfortunately, many of the international conferences we applied for where postponed or cancelled due to the current situation.
We also plan to extend our joint projects: Our research suggests that diminishing inequality requires low returns on savings. Yet, it is such a situation that also makes stagnation more likely to occur. We plan to analye these interdependencies in greater detail in the future. Moreover, our project on underemployment so far focuses on the job creation channel. We plan to analyze the implications for job destruction as well.
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| Causes of Carryover |
Unfortunately, many international conferences which I planned to attend were postponed or cancelled due to the current situation. I also had to shorten my planned visit to Paris last March. Therefore, some of the planned travel expenditures were not spent in the previous year.
I am currently planning for another research visit to Paris in order to continue our joint work on the preference for wealth with Jean Michau from Ecole Polytechnique as well as applying for conferences over the next year. However, the realization of these plans depends heavily on the improvement of the situation involving the new Corona virus. Alternatively, I am currently looking for equipment that supports online meetings. So it might be necessary to use some of these funds for equipment instead.
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