Piketty’s r-g Model: Wealth Inequality and Tax Policy

March, CESifo Forum, Vol. 16, No. 1

Author(s): Clemens Fuest, Andreas Peichl and Daniel Waldenström

Piketty’s r-g Model: Wealth Inequality and Tax Policy Clemens Fuest, Andreas Peichl and Daniel Waldenström

The so-called 𝑟−𝑔 model of Piketty (2014), which relates the difference between the rate of return on capital, 𝑟, and the rate of income growth, 𝑔 to the level of economic inequality has received enormous attention in both academic and popular circles. In its simplest characteriza-tion, it says that when existing ("old") capital grows faster than new capital is created out of accumulated incomes, then already relatively rich capital owners will become even richer relative to the others not holding capital, and thus inequality will increase.


Fuest, Clemens, Andreas Peichl and Daniel Waldenström (2015), "Piketty's r-g Model: Wealth Inequality and Tax Policy". CESifo Forum 16(1), 3–10.

Daniel Waldenström


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Martin Ljunge, IFN, is the author of a chapter, "Trust promotes health: addressing reverse causality by studying children of immigrants", in a new book edited by Sherman Folland and Eric Nauenberg. The cutting edge of research is presented, covering the ever-expanding social capital field.

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