Income Inequality: Does Inflation Matter?


Ales Bulir

Publication Date:

January 1, 1998

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


This paper contributes to the income inequality literature that is based on the traditional Kuznets model. Price stability, financial deepening, level of development, state employment, and fiscal redistribution are found to enhance income equality in a given country. While the effect of price stability is uniform for all levels of GDP per capita, the effect of financial deepening is found to increase with the level of development. Moreover, tight monetary policies do not seem to have any austere effects; low inflation reinforces, rather than counteracts, the income-equalizing effect of fiscal redistribution.


Working Paper No. 1998/007



Publication Date:

January 1, 1998



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