The Heterogeneous Impact of Inflation on Households’ Balance Sheets

Miguel Cardoso, Clodomiro Ferreira, José Miguel Leiva, Galo Nuño Barrau, Alvaro Ortiz and Tomasa Rodrigo
Additional contact information
Miguel Cardoso: BBVA Research
Clodomiro Ferreira: Banco de España
José Miguel Leiva: BBVA Research
Tomasa Rodrigo: BBVA Research

No 176, Working Papers from Red Nacional de Investigadores en Economía (RedNIE)

Abstract: We identify and study three key channels that shape how inflation affects wealth inequality: (i) the traditional Fisher channel through which inflation redistributes from lenders to borrowers; (ii) a nominal labour income channel through which inflation reduces the real value of sticky wages and benefits; and (iii) a relative consumption channel through which heterogeneous increases in the price of different goods affect people differently depending on their consumption baskets. We then quantify these channels for Spain in 2021 using public surveys on households’ wealth, income, and consumption, as well as a novel proprietary bank dataset that includes detailed information on clients’ assets and liabilities, credit and debit card payments, bills and labour related income. Results show that the Fisher and labour income channels are one order of magnitude larger than the relative consumption channel. Middle-aged individuals were roughly unaffected by inflation while older ones suffered the most its consequences.

Keywords: inflation inequality; net nominal positions; nominal wage rigidities. (search for similar items in EconPapers)
JEL-codes: D31 E21 E31 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2022-09
New Economics Papers: this item is included in nep-ban, nep-cba, nep-eec and nep-mon
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Citations: View citations in EconPapers (7)

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https://rednie.eco.unc.edu.ar/files/DT/176.pdf (application/pdf)

Related works:
Working Paper: The heterogeneous impact of inflation on households’ balance sheets (2024)
Working Paper: The heterogeneous impact of inflation on households' balance sheets (2023)
Working Paper: The Heterogeneous Impact of Inflation on Households Balance Sheets (2023)
Working Paper: The Heterogeneous Impact of Inflation on Households' Balance Sheets (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:aoz:wpaper:176

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