Inequality, inflation, and central bank independence
AbstractWhat can account for the different contemporaneous inflation experiences of various countries, and of the same country over time? We present an analysis of the determination of inflation from a political economy perspective. We document a positive correlation between income inequality and inflation and then present a theory of the determination of inflation outcomes in democratic societies that illustrates how greater inequality leads to greater inflation, owing to a desire by voters for wealth redistribution. We conclude by showing that democracies with more independent central banks tend to have better inflation outcomes for a given degree of inequality.
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Bibliographic InfoPaper provided by Federal Reserve Bank of Dallas in its series Working Papers with number 9705.
Date of creation: 1997
Date of revision:
Other versions of this item:
- Jim Dolmas & Gregory W. Huffman & Mark A. Wynne, 2000. "Inequality, inflation, and central bank independence," Canadian Journal of Economics, Canadian Economics Association, vol. 33(1), pages 271-287, February.
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
- H0 - Public Economics - - General
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gregory W. Huffman, 1997.
"An Equilibrium Analysis of Central Bank Independence and Inflation,"
Canadian Journal of Economics,
Canadian Economics Association, vol. 30(4), pages 943-58, November.
- Gregory W. Huffman, 1995. "An equilibrium analysis of central bank independence and inflation," Working Papers 9501, Federal Reserve Bank of Dallas.
- Hongyi Li & Lyn Squire & Tao Zhang & Heng-fu Zou, 1999.
"A Data Set on Income Distribution,"
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575, China Economics and Management Academy, Central University of Finance and Economics.
- Beetsma, Roel M W J & van der Ploeg, Frederick, 1996.
" Does Inequality Cause Inflation?: The Political Economy of Inflation, Taxation and Government Debt,"
Springer, vol. 87(1-2), pages 143-62, April.
- 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.
- 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, Roel & van der Ploeg, Frederick, 1992. "Does Inequality Cause Inflation? The Political Economy of Inflation, Taxation and Government Debt," CEPR Discussion Papers 741, C.E.P.R. Discussion Papers.
- Klaus Deininger & Lyn Squire, 1996.
"A New Data Set Measuring Income Inequality,"
CEMA Working Papers
512, China Economics and Management Academy, Central University of Finance and Economics.
- Cukierman, Alex & Kalaitzidakis, Pantelis & Summers, Lawrence H. & Webb, Steven B., 1993. "Central bank independence, growth, investment, and real rates," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 95-140, December.
- Alesina, Alberto & Summers, Lawrence H, 1993. "Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 25(2), pages 151-62, May.
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