Who Pays for Disinflation? Disinflationary Monetary Policy and the Distribution of Income

Willem Thorbecke

Economics Public Policy Brief Archive from Levy Economics Institute

Abstract: Using theoretical predictions, econometric results, and the example of the Volcker disinflation, Thorbecke establishes that through disinflation's burden on the durable goods and construction industries, small firms, and low-wage workers and its benefits to bond market investors, it effects a redistribution of wealth from the poor to the rich. Because of this distributional consequence, he argues, engineering a disinflationary recession now to wring more inflation out of the economy would be inappropriate. On the contrary, with inflation as low as it is and with upward pressure on wages that could trigger a rise in inflation also low, now is the time for the Federal Reserve to let the economy grow--to seek policies that promote distributive justice and that help those individuals most at risk for shrinking income.

References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.levyinstitute.org/pubs/ppb38.pdf (application/pdf)

Related works:
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:lev:levppb:ppb_38

Access Statistics for this paper

More papers in Economics Public Policy Brief Archive from Levy Economics Institute
Bibliographic data for series maintained by Elizabeth Dunn ( this e-mail address is bad, please contact ).