The distributional and welfare impact of inflation in Italy
AbstractThe entrance of Italy in the Euro area in 2001 has given rise to a wide debate about the perception of inflation on householdsâ€™ well-being. However, most of the debate has involved the measurement of the â€œcorrectâ€ consumer price index at national level. Much less analysis has been carried out on the microeconomic consequences of inflation on every household and to the investigation of its distributional impact. This paper addresses this issue by performing a microsimulation analysis of the impact of inflation on Italian households in the period 1997-2007. The extension of the study allows to capture possible structural breaks in correspondence of the adoption of the euro currency in 2001, and to get insightful information on the persistence of either positive or negative impacts. All methods of investigation proposed in this paper show that the impact of inflation has an ambiguous path over the period, yet a large concentration of welfare losses is found in the period surrounding the introduction of the euro currency. In particular, poorer and larger households are found to be severely hurt by inflation and a closer inspection suggests that the prices of gas and gasoline are largely responsible in determining living conditions of Italian households in both the period around the introduction of the euro and over the decade.
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 University of Rome La Sapienza, Department of Public Economics in its series Working Papers with number 134.
Date of creation: Jul 2010
Date of revision:
Redistribution; Inflation; Households; Welfare.;
Find related papers by JEL classification:
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- D60 - Microeconomics - - Welfare Economics - - - General
- H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
- I31 - Health, Education, and Welfare - - Welfare and Poverty - - - General Welfare
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.:
- Javier Ruiz-Castillo & Eduardo Ley & Mario Izquierdo, .
"The plutocratic bias in the CPI: Evidence from Spain,"
Studies on the Spanish Economy
- Javier Ruiz Castillo & Eduardo Ley & Mario Izquierdo, 2000. "The Plutocratic Bias in the CPI: Evidence from Spain," IMF Working Papers 00/167, International Monetary Fund.
- Morné Oosthuizen, 2007. "Consumer Price Inflation across the Income Distribution in South Africa," Working Papers 07129, University of Cape Town, Development Policy Research Unit.
- Ahmad,Etisham & Stern,Nicholas, 1991.
"The Theory and Practice of Tax Reform in Developing Countries,"
Cambridge University Press, number 9780521265638, November.
- Ahmad,Etisham & Stern,Nicholas, 1991. "The Theory and Practice of Tax Reform in Developing Countries," Cambridge Books, Cambridge University Press, number 9780521397421, November.
- Andrea Brandolini, 1999.
"The Distribution of Personal Income in Post-War Italy: Source Description, Data Quality, and the Time Pattern of Income Inequality,"
Giornale degli Economisti,
GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 58(2), pages 183-239, September.
- Andrea Brandolini, 1999. "The Distribution of Personal Income in Post-War Italy: Source Description, Data Quality, and the Time Pattern of Income Inequality," Temi di discussione (Economic working papers) 350, Bank of Italy, Economic Research and International Relations Area.
- Brandolini, A., 1999. "The Distribution of Personal Income in Post-War Italy: Source Description, Date Quality, and the Time Pattern of Income Inequality," Papers 350, Banca Italia - Servizio di Studi.
- Leicester, A. & O'Dea, C. & Oldfield, Z., 2008. "The inflation experience of older households," Open Access publications from University College London http://discovery.ucl.ac.u, University College London.
- Bart Hobijn & David Lagakos, 2005.
"Inflation Inequality In The United States,"
Review of Income and Wealth,
International Association for Research in Income and Wealth, vol. 51(4), pages 581-606, December.
- Deaton, Angus, 1977. "Equity, efficiency, and the structure of indirect taxation," Journal of Public Economics, Elsevier, vol. 8(3), pages 299-312, December.
- Francesco CHELLI & Chiara GIGLIARANO & Elvio MATTIOLI, 2009. "The Impact of Inflation on Heterogeneous Groups of Households: an Application to Italy," Working Papers 329, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
- Ian Crawford, 1994. "UK household cost-of-living indices, 1979-92," Fiscal Studies, Institute for Fiscal Studies, vol. 15(4), pages 1-28, January.
- Paolo Liberati, 2001. "The Distributional Effects of Indirect Tax Changes in Italy," International Tax and Public Finance, Springer, vol. 8(1), pages 27-51, January.
- Massimo Baldini, 2005. "Inflation inequality in Italy," Center for the Analysis of Public Policies (CAPP) 0008, Universita di Modena e Reggio Emilia, Dipartimento di Economia Politica.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Luisa Giuriato).
If references are entirely missing, you can add them using this form.