Universitat Autònoma de Barcelona
Typically inequality is not taken into account to assess the effects of policy changes over aggregate variables. We study the decline of expected inflation in a closed economy, and show that the efficiency effect of the decline is larger than what is usually reported even when inequality is considered. Here, the exogenous joint distribution of the households' characteristics is an important factor behind the magnitude of the change of the aggregates in the economy. In addition, we show that the decline of inflation improves equality of welfare across households for any calibration that is consistent with the actual joint distribution of the households' characteristics in a developed economy.
The ADEMU Working Paper Series is being supported by the European Commission Horizon 2020 European Union funding for Research & Innovation, grant agreement No 649396.
Anglès
European Commission 649396
Barcelona Graduate School of Economics. ADEMU working paper series ;
open access
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