Report
Patrick Artus

How will the rise in the wealth-to-income ratio end?

In OECD countries, the wealth -to- income ratio has risen very significantly. It is inconceivable for this trend to continue without end. But what mechanisms might stem the rise in the wealth-to-income ratio? First possibility: wealth effects increase and stimulate demand, driving up inflation and interest rates, which causes asset prices to fall; Second possibility: asset prices fall not because of a rise in interest rates, but because of an “endogenous” collapse of asset price bubbles , once they become so inflated that demand for assets fall s ; Third possibility: the growing transfer of wealth through inheritance and not through the sale of assets by old to young removes any limit to the rise in asset prices. A political reaction to rising wealth inequality could then stop the rise in the wealth-to-income ratio.
Provider
Natixis
Natixis

Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.

 

Analysts
Patrick Artus

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