02501cas a2200313 a 4500 AALejournalIMF022143 230101c9999 xx r poo 0 0eng d 5.00 USD 9781589066939 1018-5941 BD-DhAAL BD-DhAAL Kim, Taehoon. Safe Asset Demand, Global Capital Flows and Wealth Concentration / Taehoon Kim. Washington, D.C. : International Monetary Fund, 2021. 1 online resource (84 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students The US economy is often referred to as the "banker to the world," due to its unique role in supplying global reserve assets and funding foreign risky investment. This paper develops a general equilibrium model to analyze and quantify the contribution of this role to rising wealth concentration among American households. I highlight the following points: 1) financial globalization raises wealth inequality in a financially-developed economy initially due to foreign capital pressing up domestic asset prices; 2) much of this increase is transitory and can be reversed as future expected returns on domestic assets fall; and 3) despite the low-interest-rate environment, newly accessed foreign capital provides incentives for affluent households to reallocate wealth toward risky assets while impoverished households increase their debt. Wealth concentration ensues only if this rebalancing effect is large enough to counteract diminished return on domestic assets. Quantitative analysis suggests that global financial integration alone can account for a third to a half of the observed increase in the current top one percent wealth share in the US, but indicates a possible reversal in the future. Mode of access: Internet Financial Aspects of Economic Integration imf Financial Markets and The Macroeconomy imf Macroeconomics imf Open Economy Macroeconomics imf Saving imf Wealth imf IMF Working Papers; Working Paper ; No. 2021/254 Full text available on IMF http://elibrary.imf.org/view/journals/001/2021/254/001.2021.issue-254-en.xml IMF e-Library