Disinflations and Income Distribution

Laura Acevedo and Marc Hofstetter
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Laura Acevedo: Universidad de los Andes, Bogotá

International Journal of Central Banking, 2024, vol. 20, issue 4, 125-173

Abstract: Bringing down inflation is once again a priority in many countries. While there is broad consensus regarding the fact that policies aimed at bringing down inflation have adverse consequences on aggregate output and unemployment, at least in the short run, we know little about the distributional impact of disinflations. We find that during disinflations, the Gini indices rise, and the income share of the richest decile and especially the top 1 percent of the income distribution significantly increase. We discuss the implications of these findings for monetary policy.

Date: 2024
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Related works:
Working Paper: Disinflations and income distribution (2020)
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