Since the financial crisis of 2008, many developed countries have been plagued by secular economic stagnation, asset price bubbles, and widening wealth inequality. Conventional theories take various market distortions, arising from factors such as sluggish price-wage adjustments, market concentration and credit market imperfections, as their root cause. It is unlikely, however, that all these distortions emerged suddenly in 2008. In fact, following the conventional wisdom, many countries took measures to improve productive efficiency or expanded money supply so as to minimize distortions, but only to see little success to date: consumption and income continue to be sluggish, with inflated asset prices and widening economic disparities.
In this project, we aim to build a unified framework to analyze these issues by focusing on people’s desire for wealth holding, rather than economic distortions. We also investigate characteristics of wealth preferences through questionnaire surveys and experiments, and work on micro-foundations of potential policy measures.