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Inflation, Inequality and Social Conflict

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  • Chris Crowe

    (London School of Economics)

Abstract

This paper presents and then tests a political economy model to analyze the observed positive relationship between income inequality and inflation. The model's key features are unequal access to both inflation-hedging opportunities and the political process. The model predicts that inequality and 'elite bias' in the political system interact to create incentives for inflation. The paper's empirical section focuses on this predicted interaction effect. The identification strategy involves using the end of the Cold War as a source of exogenous variation in the political environment. It finds robust evidence in support of the model.

(This abstract was borrowed from another version of this item.)

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Bibliographic Info

Paper provided by Money Macro and Finance Research Group in its series Money Macro and Finance (MMF) Research Group Conference 2004 with number 69.

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Date of creation: 17 Sep 2004
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Handle: RePEc:mmf:mmfc04:69

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Web page: http://www.essex.ac.uk/afm/mmf/index.html

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  1. Christina D. Romer & David H. Romer, 1999. "Monetary policy and the well-being of the poor," Economic Review, Federal Reserve Bank of Kansas City, issue Q I, pages 21-49.
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  18. Ravallion, Martin & Datt, Gaurav, 2002. "Why has economic growth been more pro-poor in some states of India than others?," Journal of Development Economics, Elsevier, vol. 68(2), pages 381-400, August.
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Cited by:
  1. Manoel Bittencourt, 2007. "Macroeconomic Performance and Inequality: Brazil 1983-1994," Ibero America Institute for Econ. Research (IAI) Discussion Papers 163, Ibero-America Institute for Economic Research.
  2. Bittencourt, Manoel, 2008. "Inflation and Financial Development: Evidence from Brazil," Working Paper Series RP2008/14, World Institute for Development Economic Research (UNU-WIDER).
  3. Carsten Hefeker, 2009. "Taxation, Corruption and the Exchange Rate Regime," MAGKS Papers on Economics 200911, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  4. Eleftherios Thalassinos & Erginbay Ugurlu & Yusuf Muratoglu, 2012. "Income Inequality and Inflation in the EU," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 127-140.
  5. Gomes, Orlando, 2006. "Can social interaction contribute to explain business cycles?," MPRA Paper 2848, University Library of Munich, Germany.
  6. Manoel Bittencourt, 2008. "Financial Development and Inequality: Brazil 1985-1994," Working Papers 86, Economic Research Southern Africa.
  7. Bittencourt, Manoel, 2010. "Democracy, Populism and Hyperinflation[s]: Evidence from Latin America," Proceedings of the German Development Economics Conference, Hannover 2010 47, Verein für Socialpolitik, Research Committee Development Economics.
  8. Menji, Sisay, 2008. "Determinants of Recent Inflation in Ethiopia," MPRA Paper 29668, University Library of Munich, Germany.
  9. Olmo Silva, 2004. "Entrepreneurship: Can the Jack-of-All-Trades Attitude be Aquired?," CEP Discussion Papers dp0665, Centre for Economic Performance, LSE.

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