Date Added: Feb 2011
The authors study taxable wealth in unique Swedish administrative data, annually following a large sample of households over a period of almost 40 years. The main data limitation is non-observability of wealth for those below the tax exemption level. This implies that much of the focus of the paper is on the rich, since they are confined to those whose wealth becomes taxable over time. They exploit the long panel dimension by estimating dynamic 'Fixed effects' models for limited dependent variables that allow for individual heterogeneity in both constants and autoregressive parameters, and control for heterogeneity through observables.