Disinflations and Income Distribution
32 Pages Posted: 20 Oct 2020
Date Written: October 15, 2020
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: Suggested Citation