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The heterogeneous impact of inflation across the joint distribution of household income and wealth

Author

Listed:
  • Luigi Infante

    (Bank of Italy)

  • David Loschiavo

    (Bank of Italy)

  • Andrea Neri

    (Bank of Italy)

  • Matteo Spuri

    (Bank of Italy)

  • Francesco Vercelli

    (Bank of Italy)

Abstract

This paper assesses the impact of the 2022 inflationary shock on Italian households’ wealth along the joint distribution of income and net wealth. The analysis was carried out by dividing households into four groups based on their median income and net wealth, using a methodology similar to the Distributional Wealth Accounts developed at European level. The erosion of the real value of net financial wealth due to inflation was heterogeneous across households. While capital losses were small for the least wealthy households, for the wealthiest group they exceeded one tenth of annual disposable income. Conversely, the reduction in the real value of financial liabilities allowed the group of households with high income and low net wealth to realize a capital gain of nearly one tenth of their income.

Suggested Citation

  • Luigi Infante & David Loschiavo & Andrea Neri & Matteo Spuri & Francesco Vercelli, 2023. "The heterogeneous impact of inflation across the joint distribution of household income and wealth," Questioni di Economia e Finanza (Occasional Papers) 817, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_817_23
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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2023-0817/QEF_817_23.pdf
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    References listed on IDEAS

    as
    1. Greg Kaplan & Giovanni L. Violante & Justin Weidner, 2014. "The Wealthy Hand-to-Mouth," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 45(1 (Spring), pages 77-153.
    2. Greg Kaplan & Giovanni L. Violante & Justin Weidner, 2014. "The Wealthy Hand-to-Mouth," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 48(1 (Spring), pages 77-153.
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    More about this item

    Keywords

    distributional wealth accounts; inflation; joint income and wealth distribution;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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