Price Level Changes and the Redistribution of Nominal Wealth Across the Euro Area

Klaus Adam and Junyi Zhu

No 9987, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We document the presence of sizable distributional effects from unexpected price level movements in the Euro Area (EA) using sectoral accounts and newly available data from the Household Finance and Consumption Survey. The EA as a whole is a net winner of unexpected price level increases, with Italy, Greece, Portugal and Spain being the biggest beneficiaries, and Belgium and Malta being the largest losers. Governments are net winners of inflation, while the household (HH) sector is a net loser in the EA as a whole. HHs in Belgium, Ireland, Malta and Germany incur the biggest per capita losses, while HHs in Finland and Spain turn out to be net winners of inflation. Considerable heterogeneity exists also within the HH sector: relatively young middle class HHs are net winners of inflation, while older and richer HHs are losers. As a result, wealth inequality in the EA decreases with unexpected inflation, although in some countries (Austria, Germany and Malta) inequality increases due to presence of relatively few young borrowing HHs. We document that HHs inflation exposure varies systematically across countries, with HHs in high inflation EA countries holding systematically lower nominal exposures.

Keywords: Euro area; Household survey; inflation; Redistribution (search for similar items in EconPapers)
JEL-codes: D14 D31 E31 (search for similar items in EconPapers)
Date: 2014-05
New Economics Papers: this item is included in nep-eec and nep-mac
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Citations: View citations in EconPapers (9)

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Related works:
Journal Article: PRICE-LEVEL CHANGES AND THE REDISTRIBUTION OF NOMINAL WEALTH ACROSS THE EURO AREA (2016)
Journal Article: Price-Level Changes and the Redistribution of Nominal Wealth across the Euro Area (2016)
Working Paper: Price level changes and the redistribution of nominal wealth across the Euro area (2016)
Working Paper: Price Level Changes and the Redistribution of Nominal Wealth Across the Euro Area (2015)
Working Paper: Price level changes and the redistribution of nominal wealth across the euro area (2015)
Working Paper: Price level changes and the redistribution of nominal wealth across the Euro area (2014)
Working Paper: Price Level Changes and the Redistribution of Nominal Wealth Across the Euro Area (2014)
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