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Inflation and Inequality

  • Stefania Albanesi

Cross-country evidence on inflation and income inequality suggests that they are positively related. I explore the hypothesis that this correlation is the outcome of a distributional conflict underlying the determination of fiscal policy. I study a bargaining model of the political system in which inflation and inequality are positively correlated due to the relative vulnerability to inflation of low income households.

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Paper provided by IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University in its series Working Papers with number 199.

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Handle: RePEc:igi:igierp:199
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