The impact of fully anticipated inflation is systematically studied in heterogeneous agent economies with an endogenous labor supply and portfolio choices. In stationary equilibrium, inflation nonlinearly alters the endogenous distributions of income, wealth, and consumption. Small departures from zero inflation have the strongest impact. Three features determine how inflation impacts distributions and welfare: financial structure, shock persistence, and labor supply elasticity. When agents can self-insure only with money, inflation reduces wealth inequality but may raise consumption inequality. Otherwise, inflation reduces consumption inequality but may raise wealth inequality. Given persistent shocks and an inelastic labor supply, inflation may raise average welfare. The results hold when the model is extended to account for capital formation.

Understanding the Distributional Impact of Long-Run Inflation / Camera, Gabriele; Chien, Yili. - In: JOURNAL OF MONEY, CREDIT, AND BANKING. - ISSN 0022-2879. - STAMPA. - 46:6(2014), pp. 1137-1170. [10.1111/jmcb.12136]

Understanding the Distributional Impact of Long-Run Inflation

Camera, Gabriele
;
2014

Abstract

The impact of fully anticipated inflation is systematically studied in heterogeneous agent economies with an endogenous labor supply and portfolio choices. In stationary equilibrium, inflation nonlinearly alters the endogenous distributions of income, wealth, and consumption. Small departures from zero inflation have the strongest impact. Three features determine how inflation impacts distributions and welfare: financial structure, shock persistence, and labor supply elasticity. When agents can self-insure only with money, inflation reduces wealth inequality but may raise consumption inequality. Otherwise, inflation reduces consumption inequality but may raise wealth inequality. Given persistent shocks and an inelastic labor supply, inflation may raise average welfare. The results hold when the model is extended to account for capital formation.
2014
Understanding the Distributional Impact of Long-Run Inflation / Camera, Gabriele; Chien, Yili. - In: JOURNAL OF MONEY, CREDIT, AND BANKING. - ISSN 0022-2879. - STAMPA. - 46:6(2014), pp. 1137-1170. [10.1111/jmcb.12136]
Camera, Gabriele; Chien, Yili
File in questo prodotto:
Eventuali allegati, non sono esposti

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11585/635705
 Attenzione

Attenzione! I dati visualizzati non sono stati sottoposti a validazione da parte dell'ateneo

Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 13
  • ???jsp.display-item.citation.isi??? 13
social impact