Inflation and income inequality in a Schumpeterian economy with menu costs

Zhijie Zheng

Economics Letters, 2020, vol. 186, issue C

Abstract: This study incorporates heterogeneous households into a monetary Schumpeterian growth model via menu costs to explore the effect of inflation on income inequality. The source of income inequality stems from the unequal distribution across households’ assets. Given that households face the same wage rate, inflation that leads to a monotonically decreasing effect on economic growth helps mitigate income inequality by weakening the contribution of asset income relative to wage income.

Keywords: Inflation; Income inequality; Menu costs; Economic growth (search for similar items in EconPapers)
JEL-codes: D30 E58 O30 O40 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:186:y:2020:i:c:s0165176519302496

DOI: 10.1016/j.econlet.2019.07.009

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