This dissertation consists of two chapters, both of which study the wealth inequality using heterogenous agent general equilibrium model. In particular, the first chapter focuses on a government policy and its implications on wealth inequality. The second chapter incorporates cost to high return assets to generate realistic wealth mobility in the conventional model. The first chapter, "The Distributional Effects of Student Debt Forgiveness in General Equilibrium: The Role of Housing", studies the redistributional effect of student loan forgiveness by developing a general equilibrium overlapping generations model with both college education and housing choices. After making a college decision in their early 20s, agents face a discrete housing choice each period as well as the standard consumption-saving decision. Using this framework, I examine the response to a one-time student loan forgiveness. I find that general equilibrium plays an important role in amplifying the regressive aspect of the program. As the government finances the policy by raising tax rates, all individuals but the beneficiaries inevitably face welfare loss. Homeowners are partly compensated by the housing market forces. The program increases housing demand by its recipients as they are more likely to buy houses earlier than they would have otherwise. The net result is an increase in housing prices, which partially mitigates the welfare costs of the program for existing homeowners. The worst impacted group is the poor high school graduates, who are particularly hurt more by general equilibrium effects through both capital and labor markets. In short, the program increases skilled labor and, thereby, effective labor force, which then decreases the market wages and increases the interest rates. Consequently, the poor earn less but do not benefit from the higher interest rates. The second chapter, "Asset Market Segmentation and Poverty Trap: Implications on Long-Term Government Policies", studies the realistic wealth mobility in Bewley-Huggett-Aiyagari framework by incorporating the fixed cost for access to high return assets. Each individual faces idiosyncratic labor income risk and makes a discrete choice each period whether to pay the fixed (stock market) participation cost or not. After the decision on consumption and saving, the saving yields risk-free rates if and only if the individual did not pay for the cost. I found out that, opposed to the conventional continuously-rising-returns-in-wealth, the asset market segmentation plays am important role in generating poverty trap in the model. Only a sufficiently large lump-sum transfer will be effective in the wealth mobility of the low labor productivity individuals whose asset holdings are below the threshold, i.e., trapped in the poverty trap. [The dissertation citations contained here are published with the permission of ProQuest LLC. Further reproduction is prohibited without permission. Copies of dissertations may be obtained by Telephone (800) 1-800-521-0600. Web page: http://bibliotheek.ehb.be:2222/en-US/products/dissertations/individuals.shtml.]