Intergenerational Transmission of Inflation Aversion: Theory and Evidence

Etienne Farvaque and Alexander Mihailov ()

No 2009-11, IRISS Working Paper Series from IRISS at CEPS/INSTEAD

Abstract: This paper studies the transmission of preferences in an overlapping-generations model with heterogeneous mature agents characterized by different degrees of inflation aversion. We show how the dynamics of a society’s degree of inflation aversion and the implied degree of central bank independence depend on the direction and speed of changes in the structure of the population’s preferences, themselves a function of parent socialization efforts in response to observed inflation. We then construct a survey-based measure of inflation aversion and provide empirical support for our analytical and simulation results. Available cross-section evidence confirms that a nation’s demographic structure, in particular variation in the share of retirees as a proxy for the more inflationaverse type, is a key determinant of inflation aversion, together with experience with past inflation and the resulting collective memory embodied in monetary institutions.

Keywords: intergenerational transmission; evolving preferences; inflation aversion; central bank independence; collective memory (search for similar items in EconPapers)
Pages: 40 pages
Date: 2009-09
New Economics Papers: this item is included in nep-cba, nep-dge and nep-mon
References: Add references at CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
https://liser.elsevierpure.com/en/publications/int ... version-theory-and-e (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden

Related works:
Working Paper: Intergenerational Transmission of Inflation Aversion: Theory and Evidence (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:irs:iriswp:2009-11

Access Statistics for this paper

More papers in IRISS Working Paper Series from IRISS at CEPS/INSTEAD 11, Porte des Sciences, L-4366 Esch-sur-Alzette, G.-D. Luxembourg. Contact information at EDIRC.
Bibliographic data for series maintained by Philippe Van Kerm ().