Inflation Inequality in the United States

26 Pages Posted: 29 Dec 2005

See all articles by Bart Hobijn

Bart Hobijn

ASU

David Lagakos

University of California, San Diego (UCSD) - Department of Economics; National Bureau of Economic Research (NBER)

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Abstract

Different spending patterns across households and differences in price increases across goods and services lead to unequal levels of inflation faced by different households. In this paper we measure the degree of inequality in inflation across U.S. households for the period 1987-2000. The broad picture that emerges from our results is that over our whole sample period there are substantial differences in the inflation experiences across U.S. households. We find that the cost of living increases were generally higher for the elderly, in large part because of their health care expenditures, and that the cost of living of poor households is most sensitive to the, historically large, fluctuations in gasoline prices. Still, when looking at the whole population, we find that individual households that are confronted with high inflation in one year do not generally face high inflation in the subsequent year as well.

Suggested Citation

Hobijn, Bart and Lagakos, David, Inflation Inequality in the United States. Review of Income and Wealth, Vol. 51, No. 4, pp. 581-606, December 2005, Available at SSRN: https://ssrn.com/abstract=857801 or http://dx.doi.org/10.1111/j.1475-4991.2005.00170.x

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David Lagakos

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