Inflation and income inequality in a variety-expansion growth model with menu costs

Zhijie Zheng, Tapas Mishra and Yibai Yang

Economics Letters, 2020, vol. 194, issue C

Abstract: This study explores the effect of inflation on income inequality in a growth model with variety expansion and menu costs. Inflation is found to determine income inequality via both asset-value and interest-rates effects. Our numerical analyses show that higher inflation turns these effects negative, stifling economic growth and mitigating income inequality.

Keywords: Inflation; Income inequality; Menu costs; Variety expansion (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 (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:194:y:2020:i:c:s0165176520302366

DOI: 10.1016/j.econlet.2020.109373

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