Income Inequality: Does Inflation Matter?

ByAleš Bulíř

January 1, 1998

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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

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.

Subject: Income distribution, Income inequality, Inflation, National accounts, Personal income, Price stabilization, Prices

Keywords: Africa, Asia and Pacific, Eastern Europe, GDP, high-inflation steady state, income, Income distribution, Income inequality, inflation, inflation sensitivity, inflation variable, Kuznets hypothesis, low inflation, low-inflation country, Personal income, Price stabilization, WP

Pages:
34
Volume:
1998
DOI:
https://doi.org/10.5089/9781451928549.001
Issue:
007
Series:
Working Paper No. 1998/007
Stock No:
WPIEA0071998
ISBN:
9781451928549
ISSN:
1018-5941

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