Aggregate Implications of Wealth Redistribution: The Case of Inflation
UCLA Department of Economics Working Paper No. 846
10 Pages Posted: 17 Feb 2006
Date Written: Februrary 2006
This paper shows that a zero-sum redistribution of wealth within a country can have persistent aggregate effects. Motivated by the case of an unanticipated inflation episode, we consider redistribution shocks that shift resources from old to young households. Aggregate effects arise because there are asymmetries in the reaction of winners and losers to changes in wealth. We focus on two sources of asymmetries: differences in the average age of winners and losers, and differences in their labor force status.
Keywords: Redistribution, Life-cycle effects, retirement
JEL Classification: D31, D58, E31, E50
Suggested Citation: Suggested Citation