Inflation and Income Inequality : Is Food Inflation Different?

Author/Editor:

James P Walsh ; Jiangyan Yu

Publication Date:

June 1, 2012

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

There is an extensive literature noting that high inflation can add to income inequality, and a parallel literature assessing the effect of rising food prices on the poor. This paper attempts to combine these strands by dividing inflation into food and nonfood inflation and assessing whether food inflation affects income inequality differently from nonfood inflation. In an international sample and a sample of Chinese provinces, nonfood inflation exacerbates income inequality while the role of food inflation is more mixed. In a sample of Indian states broken down into urban and rural areas, we find that nonfood inflation adds to income inequality in both areas, while food inflation has a neutral to positive effect on income inequality in rural areas, providing support for the theory that rural wages may respond elastically to food prices.

Series:

Working Paper No. 12/147

Subject:

English

Publication Date:

June 1, 2012

ISBN/ISSN:

9781475504163/1018-5941

Stock No:

WPIEA2012147

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

22

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