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Disinflations and Income Distribution

Author

Listed:
  • Laura Acevedo

    (Universidad de los Andes, Bogotá)

  • Marc Hofstetter

    (Universidad de los Andes, Bogotá)

Abstract

Bringing down inflation is once again a priority in many countries. While there is broad consensus regarding the fact that policies aimed at bringing down inflation have adverse consequences on aggregate output and unemployment, at least in the short run, we know little about the distributional impact of disinflations. We find that during disinflations, the Gini indices rise, and the income share of the richest decile and especially the top 1 percent of the income distribution significantly increase. We discuss the implications of these findings for monetary policy.

Suggested Citation

  • Laura Acevedo & Marc Hofstetter, 2024. "Disinflations and Income Distribution," International Journal of Central Banking, International Journal of Central Banking, vol. 20(4), pages 125-173, October.
    • Handle: RePEc:ijc:ijcjou:y:2024:q:4:a:2
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    More about this item

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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