The Redistributive Effects of Inflation: an International Perspective
We investigate the redistributive effects of expected inflation using a microfounded monetary model where agents differ in their degree of patience and consumption risk. Money is essential, but agents can insure against consumption risk also with bonds that offer some degree of inflation protection and that are traded in financial markets with limited participation. As long as the extent of disparities in discount factors is limited, agents hold both assets in equilibrium though in different quantities according to their type. The model is then calibrated using harmonized microdata from the Luxembourg Wealth Study for a subsample of OECD countries. We find inflation does not necessarily act as a regressive tax. Indeed, the magnitude and even the direction of inflation's redistributive effects depend not only on wealth distribution, but also on bonds' real returns and liquidity, in turn affected by the share of monetary trade.
|Date of creation:||01 Sep 2013|
|Date of revision:||01 Feb 2017|
|Contact details of provider:|| Postal: Sveriges Riksbank, SE-103 37 Stockholm, Sweden|
Phone: 08 - 787 00 00
Fax: 08-21 05 31
Web page: http://www.riksbank.com/
More information through EDIRC
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.:
- Aleksander Berentsen & Gabriele Camera & C hristopher W aller, 2005.
"The Distribution Of Money Balances And The Nonneutrality Of Money,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(2), pages 465-487, 05.
- Aleksander Berentsen & Gabriele Camera & Christopher Waller, "undated". "The Distribution of Money Balances and the Non-Neutrality of Money," IEW - Working Papers 220, Institute for Empirical Research in Economics - University of Zurich.
- Jonathan Chiu & Miguel Molico, 2011. "Uncertainty, Inflation, and Welfare," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43, pages 487-512, October.
- Jonathan Chiu & Miguel Molico, 2008. "Uncertainty, Inflation, and Welfare," Staff Working Papers 08-13, Bank of Canada.
- Scott J. Dressler, 2011. "Money Holdings, Inflation, And Welfare In A Competitive Market," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(2), pages 407-423, 05.
- Scott J. Dressler, 2009. "Money Holdings, Inflation, and Welfare in a Competitive Market," Villanova School of Business Department of Economics and Statistics Working Paper Series 2, Villanova School of Business Department of Economics and Statistics.
- Pedro Gomis-Porqueras & Adrian Peralta-Alva & Christopher J. Waller, 2011. "Quantifying the shadow economy: measurement with theory," Working Papers 2011-015, Federal Reserve Bank of St. Louis.
- Chiu, Jonathan & Molico, Miguel, 2010. "Liquidity, redistribution, and the welfare cost of inflation," Journal of Monetary Economics, Elsevier, vol. 57(4), pages 428-438, May.
- Jonathan Chiu & Miguel Molico, 2007. "Liquidity, Redistribution, and the Welfare Cost of Inflation," Staff Working Papers 07-39, Bank of Canada.
- Boel, Paola & Camera, Gabriele, 2009. "Financial sophistication and the distribution of the welfare cost of inflation," Journal of Monetary Economics, Elsevier, vol. 56(7), pages 968-978, October.
- Paola Boel & Gabriele Camera, 2009. "Financial Sophistication and the Distribution of the Welfare Cost of Inflation," Purdue University Economics Working Papers 1222, Purdue University, Department of Economics.
- Subramanian S. Sriram, 2001. "A Survey of Recent Empirical Money Demand Studies," IMF Staff Papers, Palgrave Macmillan, vol. 47(3), pages 1-3.
- Shinobu Nakagawa & Yosuke Yasui, 2009. "A note on Japanese household debt: international comparison and implications for financial stability," BIS Papers chapters,in: Bank for International Settlements (ed.), Household debt: implications for monetary policy and financial stability, volume 46, pages 75-82 Bank for International Settlements.
- Barry Z. Cynamon & Donald H. Dutkowsky & Barry E. Jones, 2006. "Redefining the Monetary Agggregates: A Clean Sweep," Eastern Economic Journal, Eastern Economic Association, vol. 32(4), pages 661-672, Fall.
- Paul Gomme, 1998. "Canada's money targeting experiment," Economic Commentary, Federal Reserve Bank of Cleveland, issue Feb. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:hhs:rbnkwp:0274. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lena Löfgren)
If references are entirely missing, you can add them using this form.