On the Redistributional Effects of Long-Run Inflation in a Cash-in-Advance Economy

Venoo Kakar

MPRA Paper from University Library of Munich, Germany

Abstract: This paper analyses the redistributional effects of long-run inflation on income, wealth and consumption in the United States in a model economy with heterogeneous agents where money is introduced via a cash-in-advance constraint. In the case with transfers, we find that consumption inequality reduces as inflation increases since the low income households hold a relatively higher cash-wealth ratio. The bottom 60% of the population gains and the top 40% loses. In the case without transfers, we find that all income groups lose with the losses being more pronounced in the low income households.

Keywords: Consumption; Inequality; Inflation; Heterogeneity (search for similar items in EconPapers)
JEL-codes: E21 E31 E4 E5 E52 (search for similar items in EconPapers)
Date: 2014-05-03
New Economics Papers: this item is included in nep-mac
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Related works:
Working Paper: On the Redistributional Effects of Long-Run Inflation in a Cash-in-Advance Economy (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:55687

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