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Capital gains and wealth distribution in Italy

In: Proceedings of the IFC Conference on "Measuring the financial position of the household sector", Basel, 30-31 August 2006 - Volume 2

  • Luigi Cannari
  • Giovanni D'Alessio
  • Romina Gambacorta

This paper analyses the impact of capital gains on the level and distribution of wealth held by Italian households between 1989 and 2005. The evaluation of these issues is achieved using both macro and micro data in order to obtain a more robust result. The estimation of capital gains through macro data is obtained using national accounts data while micro data from the Bank of Italy’s Survey of Household Income and Wealth are used to reconstruct capital gains accounting for price variations in the single assets composing wealth and for households’ idiosyncratic characteristics. Capital gains, defined as in the national accounts, explain about 40 per cent of the growth in real per capita wealth observed over the whole period, and about one-third of the growth in wealth concentration. Using capital gains reconstruction we estimate that households’ inter-temporal mobility between wealth classes is significantly affected by capital gains, to which 20 per cent of the observed transitions can be ascribed. Furthermore, capital gains take second place among the determinants of wealth variations at the household level, behind savings but ahead of intergenerational transfers.

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This chapter was published in:
  • Irving Fisher Committee, 2007. "Proceedings of the IFC Conference on "Measuring the financial position of the household sector", Basel, 30-31 August 2006 - Volume 2," IFC Bulletins, Bank for International Settlements, number 26.
  • This item is provided by Bank for International Settlements in its series IFC Bulletins chapters with number 26-08.
    Handle: RePEc:bis:bisifc:26-08
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    1. Cannari Luigi & D'Alessio G. & Venturini Andrea, 2003. "La ricchezza delle famiglie nelle regioni italiane," Rivista economica del Mezzogiorno, Società editrice il Mulino, issue 1-2, pages 47-86.
    2. Orazio Attanasio & James Banks & Sarah Tanner, 1998. "Asset Holding and Consumption Volatility," NBER Working Papers 6567, National Bureau of Economic Research, Inc.
    3. Giovanni D'Alessio & Ivan Faiella, 2002. "Non-response behaviour in the Bank of Italy�s Survey of Household Income and Wealth," Temi di discussione (Economic working papers) 462, Bank of Italy, Economic Research and International Relations Area.
    4. N. Gregory Mankiw & Stephen P. Zeldes, 1990. "The Consumption of Stockholders and Non-Stockholders," NBER Working Papers 3402, National Bureau of Economic Research, Inc.
    5. Michael Reiter, 1999. "Asset prices and the measurement of wealth and saving," Economics Working Papers 396, Department of Economics and Business, Universitat Pompeu Fabra.
    6. Fabiano Schivardi & Roberto Torrini, 2004. "Firm size distribution and employment protection legislation in Italy," Temi di discussione (Economic working papers) 504, Bank of Italy, Economic Research and International Relations Area.
    7. Paiella, Monica, 2007. "Does wealth affect consumption? Evidence for Italy," Journal of Macroeconomics, Elsevier, vol. 29(1), pages 189-205, March.
    8. Claudia Biancotti & Giovanni D'Alessio & Andrea Neri, 2004. "Errori di misura nell�indagine sui bilanci delle famiglie italiane," Temi di discussione (Economic working papers) 520, Bank of Italy, Economic Research and International Relations Area.
    9. repec:ltr:wpaper:2001.09 is not listed on IDEAS
    10. Monica Paiella & Luigi Guiso, 2004. "The Role of Risk Aversion in Predicting Individual Behaviour," Econometric Society 2004 Latin American Meetings 222, Econometric Society.
    11. Andrea Brandolini & Luigi Cannari & Giovanni D’Alessio & Ivan Faiella, 2006. "Household Wealth Distribution in Italy in the 1990s," Chapters, in: International Perspectives on Household Wealth, chapter 7 Edward Elgar.
    12. Joe Peek, 1986. "Household wealth composition: the impact of capital gains," New England Economic Review, Federal Reserve Bank of Boston, issue Nov, pages 26-39.
    13. Henley, Andrew, 1998. "Changes in the Distribution of Housing Wealth in Great Britain, 1985-91," Economica, London School of Economics and Political Science, vol. 65(259), pages 363-80, August.
    14. Francesco Zollino, 2001. "Personal Saving and Social Security in Italy: Fresh Evidence from a Time Series Analysis," Temi di discussione (Economic working papers) 417, Bank of Italy, Economic Research and International Relations Area.
    15. Michael Harris, 2001. "The Income of Nations: Measurement with (What?) Theory," Working Papers 2001.09, School of Economics, La Trobe University.
    16. Shorrocks, Anthony F, 1983. "The Impact of Income Components on the Distribution of Family Incomes," The Quarterly Journal of Economics, MIT Press, vol. 98(2), pages 311-26, May.
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