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Evaluating The Distributional Implications Of Price Movements: Methodology, Application And Australian Evidence

Author

Listed:
  • Aaron Nicholas
  • Ranjan Ray
  • Rebecca Valenzuela

Abstract

This paper investigates the distributional implication of inflation in Australia. It proposes and applies a method of evaluating the nature and size of the inequality bias of price movements. In the process, the study introduces a new demographic demand model that yields sensible and well determined estimates of the general equivalence scale and the size economies of scale. The study finds that inflation in Australia during the 1990s had an inequality increasing bias and that this bias increased in the late 1990s and the first part of the new millennium. The study also provides evidence on the decomposition of overall inequality between demographic groups and compares the decomposition between the nominal and real expenditure inequalities.

Suggested Citation

  • Aaron Nicholas & Ranjan Ray & Rebecca Valenzuela, 2008. "Evaluating The Distributional Implications Of Price Movements: Methodology, Application And Australian Evidence," Monash Economics Working Papers 33/08, Monash University, Department of Economics.
    • Handle: RePEc:mos:moswps:2008-33
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    File URL: http://www.buseco.monash.edu.au/eco/research/papers/2008/3308evaluatingnicholasrayvalenzuela.pdf
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    Cited by:

    1. Ranjan Ray, 2017. "The Role of Prices in Welfare Comparisons: Methodological Developments and a Selective Survey of the Empirical Literature," The Economic Record, The Economic Society of Australia, vol. 93(301), pages 314-332, June.
    2. Abhimanyu Dadu & Namrata Gulati, 2014. "Inequality, neighborhoods and variation in prices," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2014-001, Indira Gandhi Institute of Development Research, Mumbai, India.
    3. Clements, Kenneth W. & Gao, Grace, 2012. "Quality, quantity, spending and prices," European Economic Review, Elsevier, vol. 56(7), pages 1376-1391.
    4. Namrata Gulati & Abhimanyu Dadu, 2014. "Inequality, Neighbourhoods and Variation in Prices," Economics Bulletin, AccessEcon, vol. 34(3), pages 1463-1484.
    5. Almås, Ingvild & Kjelsrud, Anders, 2017. "Rags and Riches: Relative Prices, Non-Homothetic Preferences, and Inequality in India," World Development, Elsevier, vol. 97(C), pages 102-121.
    6. Aaron Nicholas & Ranjan Ray, 2012. "Duration and Persistence in Multidimensional Deprivation: Methodology and Australian Application," The Economic Record, The Economic Society of Australia, vol. 88(280), pages 106-126, March.
    7. Ankita Mishra & Ranjan Ray, 2011. "Prices, Inequality, And Poverty: Methodology And Indian Evidence," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 57(3), pages 428-448, September.
    8. Manisha Chakrabarty & Amita Majumder & Ranjan Ray, 2015. "Preferences, Spatial Prices and Inequality," Journal of Development Studies, Taylor & Francis Journals, vol. 51(11), pages 1488-1501, November.
    9. Hooi Hooi Lean & Ma. Rebecca Valenzuela, 2012. "Inequality in Australia 1983-2004: A Stochastic Dominance Approach," Monash Economics Working Papers 06-12, Monash University, Department of Economics.
    10. S. S. Swathysree & Manisha Chakrabarty & Debopriti Bhattacharya, 2023. "Getting Real in the Real Consumption Expenditure: A Case of Rural India," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 21(4), pages 817-846, December.

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    Keywords

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    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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