We personally assess every books quality and offer rare, outofprint treasures. Why are economists giving piketty the cold shoulder. Starting off as a blog, rognlies work has morphed into a 50page academic. It was initially published in french as le capital au xxie siecle in august 20. On rognlies first point, work by piketty and zucman does break down the capital share and does break out the contribution of housing. Matthew looney is the title character in a series of four science fiction books for children by jerome beatty jr 19162002. Why frances rock star economist still wants to squeeze the rich promoting his new book, the frenchman is happy to talk marx and money, but less forthcoming about a. It is fitting then that we should ask matthew rognlie to take a bow. Meet the 26yearold whos taking on thomas pikettys ominous.
Matthew rognliethen a doctoral student, now an assistant professor at. Matthew rognlie, in a thorough and technical critique of pikettys model, concludes that pikettys justification the simultaneous longterm rise in the capitalincome ratio and the. If you exclude land and housing, capital has not risen as a share of the u. When it was first published in english in the spring of 2014, thomas piketty s book capital in the twentyfirst century was a surprising bestseller.
Piketty and gabriel zucman 2014, several forces are driving up aggre gate savings relative to income, and. Has thomas pikettys famous book capital in the 21st century been. Wealth inequality nimbys in the twentyfirst century. Some fundamental problems with thomas pikettys capital in. Matt rognlie on piketty, net capital returns, and housing.
The views expressed herein are those of the authors and do not necessarily reflect the views of the national bureau of economic research, any agency of the federal. Stiglitz to fight inequality, tax land cu global thought. Piketty and gabriel zucman 2014, several forces are driving up aggre. Thomas piketty author of capital in the twentyfirst century. In pikettys framework, this implies an increase in steadystate ky of 2. They find, like rognlie, that housing capital is an increasing share of income. Let me begin by thanking matt rognlie for doing some very serious and thoughtful digging into. In this note, i argue that neither outcome is likely given realistically diminishing returns to capital accumulation. Thomas pikettys bestselling capital in the twentyfirst century galvanized global debate about inequality. But a new challenge to mr pikettys book has just appeared, and from an unexpected direction. A note on piketty and diminishing returns to capital matthew rognlie. Matthew rognlie says that inequality may not grow in the way piketty predicts.
But research by matthew rognlie found that housing inequality that is, how much more expensive some houses are than others. The entire looney series is illustrated by the renowned cartoonist gahan wilson. It focuses on wealth and income inequality in europe and the united states since the 18th century. Maybe income inequality is all about housing the seattle. Also using piketty and zucman 20s data, i find that a single component of the capital stockhousingaccounts for nearly 100% of the longterm increase in the capitalincome ratio, and more.
In a 2016 paper, macroeconomist matthew rognlie found that most of the increase in capitals share of national income documented by economists such as thomas piketty was because of rising land prices, not to the increasing value of corporations. Deciphering the fall and rise in the net capital share. Matthews sister maria looney is the title character in beattys three subsequent books. Matthew rognlie, a 26yearold first phd student at the prestigious massachusetts institute of technology mit in boston claims to have found fundamental errors in pikettys work.
Philanthropy matters in this debate because, as moral capital, philanthropy offers an alternative solution to the piketty conundrum, and it does so without relying exclusively on a wealth tax and. Capital for the twentyfirst century, edited by jeanphilippe delsol, nicolas leucassin, and emmanuel martin, 6164. A note on piketty and diminishing returns to capital. Rognlie read pikettys book and began to recalculate. Kearney, foreign affairs the essays in after piketty are impressively diverse, not only in their subject matter but also in the way they relate to pikettys original text. Matthew rognlie, on the other hand, isnt buying piketty s proposition. Thriftbooks sells millions of used books at the lowest everyday prices. However, the reason its resounding within the economic profession is because its exhaustively data driven.
Orszag march 3, 2015 bloomberg view in the lasting debate over thomas pikettys book on outsized returns on capital, a significant fact has been obscured. Over the last few days a couple of interesting critiques of thomas pikettys capital in the twentyfirst century have been published, by matt rognlie and justin wolfers. June 15, 2014 abstract capital in the twentyfirst century predicts a rise in capitals share of income and the gap r g between capital returns and growth. This paper recasts pikettys capital in the twentyfirst century in light of acs why philanthropy matters. The result is an intellectual excursion of a kind rarely offered by modern economics. Wealth inequality nimbys in the twentyfirst century free. Summers writes, once in a great while, a heavy academic tome dominates for a time the policy debate and, despite bristling with footnotes, shows up on the bestseller list. More recently, an mit graduate student named matthew rognlie took a closer look at pikettys data and found that almost the entire change in the share of domestic income going to capital in. At the end of the volume, piketty himself weighs in. A 26yearold graduate student has delivered a technical. Piketty had worried in his book that wealth inequality could soon explode at. Pikettys thesis is that income inequality is necessarily rising because the returns to capital wealth are greater than overall economic growth, thus giving people one more reason to hate capitalists.
Rognlie is a graduate student at the massachusetts institute of technology, and at the tender age of 26, he has just published probably the most robust riposte to piketty yet. He discusses his findings on the economic blog marginal revolution two main inconsistencies in pikettys book. Piketty has many fans, but rognlie has turned many influential heads. Thomas piketty books list of books by author thomas piketty. Matthew rognlie says that inequality may not grow in the way piketty predicts, finding that the longterm rise in capital income is driven mostly by housing, not labor division. Rognlie s comment on the blog marginal revolution was a response to the provocative argument laid out by the french economist thomas piketty in his bestselling book on wealth inequality. How housing inequality fuels economic inequality citylab. For a book that contains mathematical equations, it saw unthinkable sales, clearly resonating with readers and eventually even the political system, as it provided a respectable background to mounting dissatisfaction with the economic status quo in both the united states and europe. We thank devesh raval, matthew rognlie, emmanuel saez, and marshall steinbaum for comments. Nonetheless, very little of this body of work supports pikettys thesis. Jones, matthew kustenbauder, naomi lamoureux, ulrike malmendier, kalle moene, joel mokyr, suresh naidu, jim poterba, matthew rognlie, ragnar torvik, laurence wilsesamson, francis wilson and timothy taylor for the views expressed herein are those of the authors and do not necessarily reflect the views of the national bureau of economic research. Piketty notes in his book that cobbdouglas, with an elasticity of one, is the usual benchmark and then he tries to argue that the actual elasticity is somewhat higher than this benchmark.
Deciphering the fall and rise in the net capital share j. Deciphering the fall and rise in the net capital share brookings. Thomas pikettys capital housing in the twentyfirst century. The achilles heel of rognlie s lie on piketty s peaked critique. Capital in the twentyfirst century is a 20 book by french economist thomas piketty. The student in question, matt rognlie of mit, has published a paper. These researchers, who come from many countries and many backgrounds, examine the notions of inequality, growth, wealth. How the wealthy give and what it means for our economic wellbeing. Matthew rognlie 5 additional structural and institutional forces. This 26yearold grad student didnt really debunk piketty, but what. Last month, a paper by an mit graduate student in economics named matthew rognlie, examined pikettys thesis in detail. Since the publication of capital in the twentyfirst century, thomas piketty has won many plaudits for his work on inequality. Few people illustrate the reach and influence of online discussion better than matthew rognlie.
Its arguments have been praised by nobelprize winners and politicians alike. Pikettys book and macro models of wealth inequality. First, it must understand economics as necessarily political economy. Matthew rognliethen a doctoral student, now an assistant professor at northwesterntook up that line in even greater detail in an article that eventually appeared in the brookings papers on economic activity, to which he added that the rising capitaltoincome ratio in pikettys data is. Although the book is widely recognized for its empirical contributions, it also uses this data to construct a distinctive theory about the trajectory of. Bradford delong university of california at berkeley at fold. Using the sequencespace jacobian to solve and estimate heterogeneousagent models, nber working papers 26123, national bureau of economic research, inc. Real estate using piketty and zucman 20s data, i find that a single component of the capital stockhousingaccounts for nearly 100% of the longterm increase in the capital income ratio, and more than 100% of the longterm increase in the net capital share of income when housing is removed, there is a small increase in the capitalincome ratio and a small decrease in the net. Matthew rognlie was still awake, like a lot of graduate students. Rognlies retort to piketty may operate in truly free markets where labor has mobility to meet demands.
Whats the big deal about thomas pikettys book capital in. His doctoral work was on savings, investment and monetary policy. More matt rognlie on piketty the most important point. Despite pikettys resonance with the public, his book was mostly. Provides medical books, cdroms, journals to the health sciences professionals. Online ordering and subscription to our new books info.
Matthew rognliethen a doctoral student, now an assistant professor at northwesterntook up that line in even greater detail in an article that eventually appeared in the brookings papers on economic activity, to which he added that the rising capitaltoincome ratio in pikettys data is disproportionately the result of the price. The upshot is that i am in an ideal position for a discussant. Capital for the 21 st century collects those essential criticisms from twenty specialists. Matthew rognlie, on the other hand, isnt buying pikettys proposition. See all books authored by thomas piketty, including capital in the twentyfirst century, and why save the bankers and other essays on our economic and political crisis, and more on thriftbooks. There are very interesting and important numbers that have not been. In the quest to treat income inequality, his thesis has important implications for public policy. Rognlies comment on the blog marginal revolution was a response to the provocative argument laid out by the french economist thomas piketty in his bestselling book on wealth inequality. But, as is often the case with government meddling. On the basis of historical data, one can estimate an elasticity between 1. Thomas piketty, david blanchflower and other experts say chancellors law would risk crash by shifting debt from government on to households published.
Deciphering the fall and rise in the net capital share matthew rognlie. Matthew reilly books list of books by author matthew reilly. How could economists not fawn over matthew rognlie. Matthew rognlie, a graduate student at the massachusetts institute of technology, has critiqued the highly publicized work of thomas piketty capital in the 21st century to suggest that rising inequality is largely due to the accumulation of wealth in housing. If there is an elasticity of 1 in pikettys units, this implies a decrease in r from 5% to 2%, and thus a decrease in the gap rg from 2. The second reason is because, in the us at least, the share of gdi going to worker wages, sala. The epic successor to one of the most important books of the century. But if you take out housing, piketty and zucman find the capital share in the united states is still increasing.
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