Intergenerational Transmission of Inflation Aversion: Theory and Evidence
AbstractWe study the evolution of inflation aversion preferences across generations. In the theoretical part of the paper, we analyze the dynamics of such preferences in an overlapping-generations model with heterogenous mature agents characterized by different degrees of inflation aversion. We show how the stability of a society’s degree of inflation aversion depends on the strength and speed of changes in the structure of the population. The empirical part then proposes two applications in support of the theoretical results. We first link demographic structures to inflation aversion, and then proceed by looking at the relations between income (in)equality and measures of inflation aversion.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Henley Business School, Reading University in its series Economics & Management Discussion Papers with number em-dp2008-71.
Length: 33 pages
Date of creation: 23 Nov 2008
Date of revision:
Contact details of provider:
Postal: PO Box 218, Whiteknights, Reading, Berks, RG6 6AA
Phone: +44 (0) 118 378 8226
Fax: +44 (0) 118 975 0236
Web page: http://www.henley.reading.ac.uk/
More information through EDIRC
Intergenerational transmission; evolving preferences; inflation aversion; central bank independence; demographic change; income inequality;
Other versions of this item:
- Farvaque, Etienne & Mihailov, Alexander, 2009. "Intergenerational Transmission of Inflation Aversion: Theory and Evidence," IRISS Working Paper Series 2009-11, IRISS at CEPS/INSTEAD.
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- J10 - Labor and Demographic Economics - - Demographic Economics - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-01-17 (All new papers)
- NEP-CBA-2009-01-17 (Central Banking)
- NEP-MAC-2009-01-17 (Macroeconomics)
- NEP-MON-2009-01-17 (Monetary Economics)
- NEP-UPT-2009-01-17 (Utility Models & Prospect Theory)
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.:
- Nelson, Edward, 2008.
"Ireland and Switzerland: The jagged edges of the Great Inflation,"
European Economic Review,
Elsevier, vol. 52(4), pages 700-732, May.
- Edward Nelson, 2006. "Ireland and Switzerland: the jagged edges of the Great Inflation," Working Papers 2006-016, Federal Reserve Bank of St. Louis.
- Jayadev, Arjun, 2006. "Differing preferences between anti-inflation and anti-unemployment policy among the rich and the poor," Economics Letters, Elsevier, vol. 91(1), pages 67-71, April.
- de Jong, Eelke, 2002. "Why are price stability and statutory independence of central banks negatively correlated? The role of culture," European Journal of Political Economy, Elsevier, vol. 18(4), pages 675-694, November.
- Maria Saez-Marti & Anna Sjögren, 2007.
"Peers and Culture,"
IEW - Working Papers
349, Institute for Empirical Research in Economics - University of Zurich.
- Bullard, James & Waller, Christopher J, 2004.
"Central Bank Design in General Equilibrium,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 36(1), pages 95-113, February.
- Brumm, Harold J., 2002. "Inflation and Central Bank independence revisited," Economics Letters, Elsevier, vol. 77(2), pages 205-209, October.
- Bisin, A. & Verdier, T., 1999.
"A model of cultural transmission, voting and political ideology,"
DELTA Working Papers
1999-13, DELTA (Ecole normale supérieure).
- Bisin, Alberto & Verdier, Thierry, 2000. "A model of cultural transmission, voting and political ideology," European Journal of Political Economy, Elsevier, vol. 16(1), pages 5-29, March.
- Bisin, A. & Verdier, T., 1999. "A Model of Cultural Transmission, Voting and Political Ideology," Papers 1999-13, Laval - Laboratoire Econometrie.
- George A. Akerlof & William R. Dickens & George L. Perry, 1996. "The Macroeconomics of Low Inflation," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 27(1), pages 1-76.
- Berentsen, Aleksander & Strub, Carlo, 2009.
"Central bank design with heterogeneous agents,"
European Economic Review,
Elsevier, vol. 53(2), pages 139-152, February.
- Hayo, Bernd, 1998. "Inflation culture, central bank independence and price stability," European Journal of Political Economy, Elsevier, vol. 14(2), pages 241-263, May.
- Daniels, Joseph P. & VanHoose, David D., 2006. "Openness, the sacrifice ratio, and inflation: Is there a puzzle?," Journal of International Money and Finance, Elsevier, vol. 25(8), pages 1336-1347, December.
- Scheve, Kenneth, 2004. "Public Inflation Aversion and the Political Economy of Macroeconomic Policymaking," International Organization, Cambridge University Press, vol. 58(01), pages 1-34, February.
- Stefan Krause & Fabio Mendez, 2003.
"Policy Makers' Preferences, Party Ideology, and the Political Business Cycle,"
0319, Department of Economics, Emory University (Atlanta).
- Stefan Krause & Fabio Méndez, 2005. "Policy Makers' Preferences, Party Ideology, and the Political Business Cycle," Southern Economic Journal, Southern Economic Association, vol. 71(4), pages 752-767, April.
- Okina, Kunio & Shirakawa, Masaaki & Shiratsuka, Shigenori, 2001. "The Asset Price Bubble and Monetary Policy: Japan's Experience in the Late 1980s and the Lessons: Background Paper," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 19(S1), pages 395-450, February.
- Pierpaolo Benigno & Luca Antonio Ricci, 2008.
"The Inflation-Unemployment Trade-Off at Low Inflation,"
NBER Working Papers
13986, National Bureau of Economic Research, Inc.
- Luca Antonio Ricci & Pierpaolo Benigno, 2009. "The Inflation-Unemployment Trade-Off At Low Inflation," IMF Working Papers 09/34, International Monetary Fund.
- Jon Faust, 1992. "Whom can we trust to run the Fed? Theoretical support for the founders' views," International Finance Discussion Papers 429, Board of Governors of the Federal Reserve System (U.S.).
- Bisin, A. & Verdier, T., 1997.
"The Economics of Cultural Transmission and the Dynamics of Preferences,"
DELTA Working Papers
97-03, DELTA (Ecole normale supérieure).
- Bisin, Alberto & Verdier, Thierry, 2001. "The Economics of Cultural Transmission and the Dynamics of Preferences," Journal of Economic Theory, Elsevier, vol. 97(2), pages 298-319, April.
- Krause, Stefan & Méndez, Fabio, 2008.
"Institutions, arrangements and preferences for inflation stability: Evidence and lessons from a panel data analysis,"
Journal of Macroeconomics,
Elsevier, vol. 30(1), pages 282-307, March.
- Stefan Krause & Fabio Mendez, 2005. "Institutions, Arrangements, and Preferences for Inflation Stability: Evidence and Lessons from a Panel Data Analysis," Emory Economics 0501, Department of Economics, Emory University (Atlanta).
- Christopher Crowe & Ellen E. Meade, 2007. "The Evolution of Central Bank Governance around the World," Journal of Economic Perspectives, American Economic Association, vol. 21(4), pages 69-90, Fall.
- Verme, Paolo, 2009.
"Happiness, Deprivation and the Alter Ego,"
IRISS Working Paper Series
2009-18, IRISS at CEPS/INSTEAD.
- Muhammad Azmat Hayat & Etienne Farvaque, 2012.
"Public Attitudes towards Central Bank Independence: Lessons From the Foundation of the ECB,"
- Hayat, Muhammad Azmat & Farvaque, Etienne, 2012. "Public attitudes towards central bank independence: Lessons from the foundation of the ECB," European Journal of Political Economy, Elsevier, vol. 28(4), pages 512-523.
- Ehrmann, Michael & Tzamourani, Panagiota, 2009.
"Memories of high inflation,"
Working Paper Series
1095, European Central Bank.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ed Quick).
If references are entirely missing, you can add them using this form.