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.
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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:
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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 - - Macroeconomics: 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)
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