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Inflation and income inequality in a Schumpeterian economy with menu costs

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  • Zheng, Zhijie

Abstract

This study incorporates heterogeneous households into a monetary Schumpeterian growth model via menu costs to explore the effect of inflation on income inequality. The source of income inequality stems from the unequal distribution across households’ assets. Given that households face the same wage rate, inflation that leads to a monotonically decreasing effect on economic growth helps mitigate income inequality by weakening the contribution of asset income relative to wage income.

Suggested Citation

  • Zheng, Zhijie, 2020. "Inflation and income inequality in a Schumpeterian economy with menu costs," Economics Letters, Elsevier, vol. 186(C).
  • Handle: RePEc:eee:ecolet:v:186:y:2020:i:c:s0165176519302496
    DOI: 10.1016/j.econlet.2019.07.009
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    References listed on IDEAS

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    Cited by:

    1. Gnangnon, Sèna Kimm, 2020. "Aid for Trade flows and Wage Inequality in the manufacturing sector of recipient-countries," EconStor Preprints 213936, ZBW - Leibniz Information Centre for Economics.
    2. Zheng, Zhijie & Mishra, Tapas & Yang, Yibai, 2020. "Inflation and income inequality in a variety-expansion growth model with menu costs," Economics Letters, Elsevier, vol. 194(C).
    3. Zheng, Zhijie & Huang, Chien-Yu & Wan, Xi, 2020. "Human Capital and Income Inequality in a Monetary Schumpeterian Growth Model," MPRA Paper 101912, University Library of Munich, Germany.

    More about this item

    Keywords

    Inflation; Income inequality; Menu costs; Economic growth;

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • D30 - Microeconomics - - Distribution - - - General

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