Inflation and Income Distribution: Further Evidence on Empirical Links

30 Pages Posted: 15 Feb 2006

See all articles by Aleš Bulíř

Aleš Bulíř

International Monetary Fund (IMF)

Anne-Marie Gulde

International Monetary Fund (IMF)

Date Written: August 1995

Abstract

This paper examines the effects of inflation and associated financial instability on income distribution. Using both pooled cross country and single country time series models, the level of inflation, inflation variability, and the variability of the nominal exchange rate are shown to impact negatively on overall income equality. Looking at disaggregate measures of income distribution, the issue as to whether inflation is a progressive or regressive tax is found to be negatively correlated with the level of development and the sophistication of the financial structure. The paper argues that these results point towards financial variables as a partial way of rectifying the generally poor explanatory power of both cross-country and time series models of income distribution.

JEL Classification: E25, E31, 015

Suggested Citation

Bulir, Ales and Gulde, Anne-Marie, Inflation and Income Distribution: Further Evidence on Empirical Links (August 1995). IMF Working Paper No. 95/86, Available at SSRN: https://ssrn.com/abstract=883233

Ales Bulir (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Anne-Marie Gulde

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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