Professor Clara Martinez-Toledano will present the paper “House Price Cycles, Wealth Inequality and Portfolio Reshuffling”.
This paper studies the determinants of wealth inequality during housing booms and busts. I examine two episodes over the last four decades in Spain by combining fiscal data with household surveys and national accounts. I find that heterogeneity in capital gains is the main driver behind the fall in wealth inequality during housing booms, while heterogeneity in saving rates and portfolio choices are the main explanatory forces of the rise in wealth concentration during housing busts. Top wealth holders are better at timing the market and reshuffling their portfolios, as they appear to be subject to less portfolio adjustment frictions.