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Understanding the distributional impact of long-run inflation

Camera, Gabriele and Chien, YiLi. (2014) Understanding the distributional impact of long-run inflation. Journal of Money, Credit and Banking, 46 (6). 1137 -1170.

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Official URL: http://edoc.unibas.ch/42855/

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Abstract

The impact of fully anticipated inflation is systematically studied in heterogeneous agent economies with an endogenous labor supply and portfolio choices. In stationary equilibrium, inflation nonlinearly alters the endogenous distributions of income, wealth, and consumption. Small departures from zero inflation have the strongest impact. Three features determine how inflation impacts distributions and welfare: financial structure, shock persistence, and labor supply elasticity. When agents can self-insure only with money, inflation reduces wealth inequality but may raise consumption inequality. Otherwise, inflation reduces consumption inequality but may raise wealth inequality. Given persistent shocks and an inelastic labor supply, inflation may raise average welfare.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Experimental Makroeconomics (Camera)
UniBasel Contributors:Camera, Gabriele
Item Type:Article, refereed
Article Subtype:Research Article
Publisher:Wiley-Blackwell
ISSN:0022-2879
e-ISSN:1538-4616
Note:Publication type according to Uni Basel Research Database: Journal article
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Last Modified:12 Jul 2018 09:15
Deposited On:12 Dec 2016 10:50

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