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dc.creatorGottlieb, Charles
dc.date.accessioned2021-09-28T09:25:28Z
dc.date.available2021-09-28T09:25:28Z
dc.date.issued2015-06-01
dc.identifier.urihttps://fif.hebis.de/xmlui/handle/123456789/2217
dc.description.abstractThis paper undertakes a quantitative investigation of the effects of anticipated inflation on the distribution of household wealth and welfare. Consumer Finance Data on household financial wealth suggests that about a third of the US population holds all its financial assets in transaction accounts. The remaining two-third of the US population holds most of their financial assets outside transaction accounts. To account for this evidence, I introduce a portfolio choice in a standard incomplete markets model with heterogeneous agents. I calibrate the model economy to SCF 2010 US data and use this environment to study the distributive effects of changes in anticipated inflation. An increase in anticipated inflation leads households to reshuffle their portfolio towards real assets. This crowding-in of supply for real assets lowers equilibrium interest rates and thereby redistributes wealth from creditors to borrowers. Because borrowers have a higher marginal utility, this redistribution improves aggregate welfare. First, this paper shows that inflation acts not only a regressive consumption tax as in Erosa and Ventura (2002), but also as a progressive tax. Second, this paper shows that the welfare cost of inflation are even lower than the estimates computed by Lucas (2000) and Ireland (2009). Finally, this paper offers insights into why deflationary environments should be avoided.
dc.rightsAttribution-ShareAlike 4.0 International
dc.rights.urihttp://creativecommons.org/licenses/by-sa/4.0/
dc.subjectHousehold Finance
dc.titleOn the Distributive Effects of Inflation
dc.typeWorking Paper
dcterms.referenceshttps://fif.hebis.de/xmlui/handle/123456789/1489?SCF
dc.source.filename116_SSRN-id2660166
dc.identifier.safeno116
dc.subject.keywordsanticipated inflation
dc.subject.keywordsmonetary policy
dc.subject.keywordsincomplete markets
dc.subject.keywordsheterogeneous agents
dc.subject.keywordsendogenous asset market participation
dc.subject.topic1redistributes
dc.subject.topic1denotes
dc.subject.topic1table
dc.subject.topic2debtor
dc.subject.topic2parallel
dc.subject.topic2anticipate
dc.subject.topic3average
dc.subject.topic3policy
dc.subject.topic3reduce
dc.subject.topic1nameHousehold Finance
dc.subject.topic2nameFiscal Stability
dc.subject.topic3nameMonetary Policy
dc.identifier.doi10.2139/ssrn.2660166


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Attribution-ShareAlike 4.0 International
Except where otherwise noted, this item's license is described as Attribution-ShareAlike 4.0 International