Disinflations and Income Distribution

32 Pages Posted: 20 Oct 2020

See all articles by Laura Gómez-Acevedo

Laura Gómez-Acevedo

Inter-American Development Bank (IDB)

Marc Hofstetter

Universidad de los Andes

Date Written: October 15, 2020

Abstract

Most countries in the world have brought inflation down to very low rates. While there is broad consensus regarding the fact that polices aimed at bringing down inflation have adverse consequences on aggregate output and unemployment, at least in the short run, we know little about the distributional impact of disinflations. We find that along with disinflation, the income distribution tends to worsen: the Gini increases and the income share of those at the top of the income distribution significantly increases. We discuss the implications of these findings for monetary policy.

Keywords: Monetary Policy, Central Banks, Inflation, Disinflation, Income distribution

JEL Classification: E31, E32, E43, E52, E58, D31

Suggested Citation

Gómez-Acevedo, Laura and Hofstetter, Marc, Disinflations and Income Distribution (October 15, 2020). Documento CEDE No. 41, Available at SSRN: https://ssrn.com/abstract=3712705 or http://dx.doi.org/10.2139/ssrn.3712705

Laura Gómez-Acevedo (Contact Author)

Inter-American Development Bank (IDB) ( email )

1300 New York Avenue NW
Washington, DC 20577
United States

Marc Hofstetter

Universidad de los Andes ( email )

Carrera Primera # 18A-12
Bogota, DC D.C. 110311
Colombia

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