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 Tilburg - Center for Economic Research in its series Papers with number 9230.
Length: 12 pages
Date of creation: 1992
Date of revision:
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Postal: TILBURG UNIVERSITY, CENTER FOR ECONOMIC RESEARCH, 5000 LE TILBURG THE NETHERLANDS.
Phone: 31 13 4663050
Fax: 31 13 4663066
Web page: http://center.uvt.nl/
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economic policy ; financial policy;
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, 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.
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
- H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
- D3 - Microeconomics - - Distribution
- E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
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