Does Inequality Cause Inflation? The Political Economy of Inflation, Taxation and Government Debt
AbstractA democratic society in which the distribution of wealth is unequal elects political parties which tend to represent the interests of the poor. The clientele of such governments favour unanticipated inflation taxes to erode the real value of debt service and redistribute income from the rich to the poor. Consequently, inequality sows the seeds for inflation. Regressions confirm the empirical predictions of the model and show a strong positive relationship between the inflation rate and inequality, for a cross-section of democratic countries.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 741.
Date of creation: Nov 1992
Date of revision:
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Other versions of this item:
- Beetsma, Roel M W J & van der Ploeg, Frederick, 1996. " Does Inequality Cause Inflation?: The Political Economy of Inflation, Taxation and Government Debt," Public Choice, Springer, vol. 87(1-2), pages 143-62, April.
- Beetsma, R.M.W.J. & Ploeg, F. van der, 1992. "Does inequality cause inflation?: The political economy of inflation, taxation and government debt," Discussion Paper 1992-30, Tilburg University, Center for Economic Research.
- Beetsma, R.M.W.J. & Van Der Ploeg, F., 1992. "Does Inequality Cause Inflation? The Political Economy of Inflation, Taxation and Government Debt," Papers 9230, Tilburg - Center for Economic Research.
- D3 - Microeconomics - - Distribution
- E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
- E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
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