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Economics for Inclusive Prosperity (EfIP): Finance and Taxation

Paper Session

Sunday, Jan. 5, 2020 1:00 PM - 3:00 PM (PDT)

Marriott Marquis, San Diego Ballroom A
Hosted By: American Economic Association
  • Chair: Dani Rodrik, Harvard University

Towards a Better Financial System

Anat Admati
Stanford University


The financial system is fragile and distorted because current rules fail to counter the distorted incentives by banking institutions to borrow excessively and to remain opaque. Better-designed rules to reduce the reliance on debt and to ensure that institutions use significantly more equity would enable the financial system to serve society better. Revising counterproductive tax and bankruptcy codes that, together with the extensive safety net offered to the financial system currently encourage dangerous conduct, would also be beneficial.

How to Think about Finance?

Atif R. Mian
Princeton University


There has been a major structural shift in financial markets since the 1980s. The world is awash in credit, and credit is cheaper than ever before. I discuss how increasing financial surpluses within parts of the economy have resulted in an expansion in the supply of credit, which has largely financed the demand-side of the real economy. This increasing reliance on “credit as demand” raises some serious policy questions going forward. I discuss the importance of equitable and inclusive growth, fair taxation system and risk-sharing in creating a financial system that promotes prosperity and stability.

Progressive Wealth Taxation

Gabriel Zucman
University of California-Berkeley
Emmanuel Saez
University of California-Berkeley


This paper discusses the progressive taxation of household wealth. We first discuss what wealth is, how it is distributed, and how much revenue a progressive wealth tax could generate in the United States. We try to reconcile discrepancies across wealth data sources. Second, we discuss the role a wealth tax can play to increase the overall progressivity of the US tax system. Third, we discuss the empirical evidence on wealth tax avoidance and evasion as well as tax enforcement policies. We summarize the key elements needed to make a US wealth tax work in light of the experience of other countries. Fourth, we discuss the real economic effects of wealth taxation on inequality, the capital stock, and economic activity. Fifth, we present a simple tractable model of the taxation of billionaires' wealth that can be applied to the Forbes list of the 400 richest Americans since 1982 to illustrate the long-run effects of concrete wealth tax proposals on top fortunes.
Sebnem Kalemli-Ozcan
University of Maryland-College Park
Stefanie Stantcheva
Harvard University
JEL Classifications
  • G0 - General
  • H2 - Taxation, Subsidies, and Revenue