Prague Economic Papers 2017, 26(6):633-645 | DOI: 10.18267/j.pep.630

Inflation and Income Inequality

Arkadiusz Sieron
Institute of Economic Sciences, University of Wroclaw, Wroclaw, Poland (sieron.arkadiusz@gmail.com)

The aim of this paper is to examine the relationship between inflation and income inequality. The article is mainly theoretical, but considerations presented are illustrated by relevant empirical data. Based on our analysis, we claim that inflation, which accelerated after the collapse of the Bretton Woods system in 1971, could have contributed to the rise in income inequality in the USA since the 1970s. Our article transcends the simple notion of an inflation tax and focuses on other redistributive mechanisms of inflation (Cantillon effect) as one of the main causes of income inequality.

Keywords: Cantillon effect, income inequality, inflation, redistribution, wealth inequality
JEL classification: D31, E31, E51

Published: December 1, 2017  Show citation

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Sieron, A. (2017). Inflation and Income Inequality. Prague Economic Papers, 26(6), 633-645. doi: 10.18267/j.pep.630
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