inflation taxation and welfare with externalities and leisure this paper examines how inflation taxation affects resource allocation and welfare in a neoclassical growth model with leisure a production externality and money in the utility function switching from consumption taxation to inflation taxation to finance government spending reduces real money balances relative to income but increases consumption labor capital and output the net welfare effect of this switch depends crucially on the strength of the externality and on the elasticity of intertemporal substitution while it is always negative without the externality it is likely to be positive with a strong externality and elastic intertemporal substitution

financial development income inequality and the redistributive effects of monetary policy abstract how should financial systems be designed to limit income inequality does the redistributive impact of inflation depend on the extent of financial development should optimal monetary policy vary across countries with different levels of financial development in order to address these questions we develop a monetary growth production model with heterogeneous agents in our economy optimal policy needs to weigh the effects of policy across two groups capital owners and individuals who hold liquid assets in this environment we compare various economies that are identical in every aspect except for their level of financial development interestingly we generally find that economies at the highest stages of financial development economies in which money bonds and claims to capital are traded experience the highest amount of capital formation and social welfare as long as inflation is low yet regardless of the extent of financial development there are generally redistributive consequences from inflation moreover the model tends to predict that economies with relatively small stock markets produce the highest levels of income inequality empirical work examining the role of money growth and the implications of financial development across countries is consistent with predictions from the model

a reverse robin hood the distributional implications of non standard monetary policy for italian households abstract we study empirically the distributional implications of ecb non standard monetary policy by exploiting a rich micro dataset on italian households income and wealth and contemporaneously taking into account all relevant transmission channels our results do not support the claim that an unconventional monetary loosening acts as a reverse robin hood larger benefits accrue to households at the bottom of the income scale as the effects via the stimulus to economic activity and employment outweigh those via financial markets the response of net wealth is moderately u shaped less wealthy households take advantage of their leveraged positions wealthier households of their larger share of financial assets overall the effects on inequality are negligible the results also suggest that savers are not hurt as the decrease in the remuneration of assets is compensated by support to labour income and by capital gains

the impact of monetary policy on inequality in the uk an empirical analysis the uk has experienced a dramatic increase in earnings and income inequality over the past four decades we use detailed micro level information to construct quarterly historical measures of inequality from 1969 to 2012 we investigate whether monetary policy shocks played a role in explaining this increase in inequality we find that contractionary monetary policy shocks lead to an increase in earnings income and consumption inequality and contribute to their fluctuation the response of income and consumption at different quantiles suggests that contractionary policy has a larger negative effect on low income households and those that consume the least when compared to those at the top of the distribution our evidence also suggests that the policy of quantitative easing may have contributed to the increase in inequality over the great recession

heterogeneity redistribution and the friedman rule we study monetary models with nondegenerate stationary distributions of money holdings we find that the friedman rule does not typically maximize ex post social welfare an increase in the rate of growth of the money supply has two effects the standard distortionary or rate of return effect makes money a less desirable asset for all moneyholders a second redistributive effect creates a transfer from one type of agent to the other an increase in the rate of growth of money away from the friedman rule can produce a rate of return effect that dominates the standard effect

inflation and welfare in a monetary economy it is in everyone s private interest to try to get someone else to hold non interest bearing cash and reserves but someone has to hold it all so these efforts must simply cancel out all of us spend several hours per year in this effort and employ thousands of talented and highly trained people to help us these person hours are simply thrown away wasted on a task that should not have to be performed at all

specialization transactions technologies and money growth this paper develops a differentiated product model with endogenous specialization in which either money or a costly alternative transactions technology can be used for market purchases we discuss the real effects of monetary growth in this model which differ from those in standard cash in advance models and the implied interest sensitivity of money demand in general equilibrium

endogenous market participation and the general equilibrium value of money we study the monetary theory implications of fixed costs associated with trade in private assets we show that with heterogeneous endowment profiles it is possible for an endogenous subset of agents to hold currency even when it is dominated in return by a competing asset with respect to positive issues in monetary theory the model implies that changes in the steady state growth rate of the money supply have a negative effect on real interest rates because of endogenous market participation measures on the normative side we show that there may be an equity efficiency trade off from monetary deflation

environmental and social degradation as the engine of economic growth abstract in this paper a commonly owned resource an environmental or social asset and a private good are substitutes in consumption the households can buy the private good on the market while the resource is available for free the resource is renewable but its ability to regenerate declines with the level of aggregate production each single firm producing the private good has only a negligible impact on the resource but the impact caused by the entire population of firms is considerable in the face of a decrease in the stock of the resource households are induced to increase their participation in market activities in order to raise their income and buy more private goods hence each household contributes to a further increase in aggregate production thus causing additional damage to the resource s ability to regenerate and feeding the growth process given the presence of negative externalities multiple equilibrium paths are possible in this situation social conventions may guide individuals to coordinate expectations and behavior toward a particular steady state one can speculate that the dominance of cultural values favorable to a lifestyle based on a mix of high consumption and hard work leads the economy to converge on a pareto inferior steady state

who is afraid of the friedman rule in this paper we explore the connection between optimal monetary policy and het erogeneity among agents we study a standard monetary economy with two types of agents in which the stationary distribution of money holdings is non degenerate sans type specific fiscal policy we show that the zero nominal interest rate policy the friedman rule does not maximize type specific welfare it may not maximize aggregate social welfare either indeed one or more surprisingly both types may benefit if the central bank deviates from the friedman rule our results suggest a positive explanation for why central banks around the world do not implement the friedman rule

economic growth and emissions reconsidering the empirical basis of environmental kuznets curves abstract recent empirical research indicates that certain types of emissions follow an inverted u or environmental kuznets curve ekc as income grows this regularity has been interpreted as a possible de linking of economic growth and patterns of certain pollutants for developed economies in this paper the empirical basis of this result is investigated by considering some statistical particularities of the various ekc studies performed it is argued that the inverted u relationship between income and emissions estimated from panel data need not hold for specific individual countries over time based on insights from intensity of use analysis in resource economics an alternative growth model is specified and estimated for three types of emissions co2 nox and so2 in four countries netherlands uk usa and western germany it is found that the time patterns of these emissions correlate positively with economic growth and that emission reductions may have been achieved as a result of structural and technological changes in the economy sustainable growth is defined as the rate of economic growth that does not lead to growth in emissions its rate is calculated for each type of emission and country based on estimated parameter values the resulting indicators reflect a balance between the positive influence of growth and negative influence of structural change and technological progress on emission levels

transaction services inflation and welfare this paper is motivated by empirical observations on the comovements of currency velocity inflation and the relative size of the credit services sector we document these comovements and incorporate into a monetary growth model a credit services sector that provides services that help people economize on money our model makes two new contributions first we show that direct evidence on the appropriately defined credit service sector for the united states is consistent with the welfare cost measured using an estimated money demand schedule second we provide estimates of the welfare cost of inflation that have some new features

inflation and the dispersion of real wages the eects of inflation on real wage dispersion and welfare are studied in a cash in advance economy with a walrasian goods market but a labor market with search friction in which firms enjoy monopsony power in the labor market firms post wages and both the employed and the unemployed workers search among the posted wages in equilibrium a higher inflation rate reduces the dispersion in real wages this result is consistent with both the observed trends in wage dispersion and the inflation rate witnessed in the 1980 s and the 1990 s in the u s and the empirical literature linking reduced inflation to greater wage dispersion while higher inflation always lowers consumption output and employment the optimal inflation rate exceeds the friedman rule

a model of money with multilateral matching we develop a model of decentralized monetary exchange to examine the distributional effects of inflation across heterogeneous agents the agents have private information about their productivity preferences or money holdings matching is multilateral and each seller is visited by a stochastic number of buyers the good is allocated according to a second price auction in money in equilibrium homogeneous buyers hold different amounts of money leading to price dispersion we find the closed form solution for the distribution of money holdings entry of sellers is suboptimal except at the friedman rule inflation acts as a regressive tax

contract farming configuration smallholders preferences for contract design attributes while contract farming cf can enhance smallholders income in developing countries empirical research on the motivation of smallholders to participate in cf is scarce this paper explores farmer preferences for particular contract design attributes we combined analytical hierarchy process and discrete choice experiments to investigate the importance of contract design attributes on the basis of data collected among potato farmers in ethiopia we found that input market uncertainty is more important than output market uncertainty in smallholders decision to participate farmers tend to minimize their risk by opting for the buyer firm above the state and ngos as providers of seed inputs and technical assistance the results imply that the success of a cf scheme depends on the willingness of the firm to incorporate the preferred contract design attributes institutional intervention in the input market could induce agribusiness firms to offer attractive contracts for smallholders

inflation nominal portfolios and wealth redistribution in canada les ameliorations dont pourraient beneficier les regimes de politique monetaire font actuellement l objet d un debat public dans les pays caracterises par un taux d inflation bas et stable comme les etats unis et le canada ainsi le regime canadien de cibles d inflation est soumis en ce moment a un examen en profondeur

analysis of challenges inhibiting the reduction of waste in food supply chain the main objective of this paper is to identify and analyse the effectiveness of challenges inhibiting the reduction of waste in indian agri food supply chain afsc the reduction of food waste impacts positively all three dimensions of sustainability economic social and environmental thirty three challenges inhibiting reduction of waste in afsc are identified by a review of the literature and a consultation with experts in the indian food industry and academia these challenges are grouped using exploratory factor analysis into a super set of nine challenges the inter relationship and respective dominance among these nine challenges is then determined using interpretive structural modelling and micmac analysis the group of independent challenges food characteristics supply chain uncertainty market infrastructure and food policy and regulation have higher driving power and low dependency and require maximum attention these four challenges constrain decisions at the three decision making echelon strategic tactical and operational and each of the supply chain echelons the group of dependent challenges supply chain partnerships operational capability and supply chain networks have high dependence and low driving power and are resultant effects the challenge information technology with high driving and dependence power is a linkage variable it acts as an enabler of dependent variables and it mitigates the complexities due to food characteristics and uncertainty the challenge consumer behaviour with low driving and dependence power is an autonomous variable it has little influence on waste reduction in indian afsc this study highlights the importance of conducting region specific study of supply chains and promotes sustainable practice

money liquidity and welfare abstract this paper develops an analytically tractable bewley model of money demand to shed light on some important questions in monetary theory such as the welfare cost of inflation it is shown that when money is a vital form of liquidity to meet uncertain consumption needs the welfare costs of inflation can be extremely large with log utility and parameter values that best match both the aggregate money demand curve suggested by lucas 2000 and the variance of household consumption agents in our model are willing to reduce consumption by 3 4 to avoid 10 annual inflation the astonishingly large welfare costs of inflation arise because inflation increases consumption risk by eroding the buffer stock insurance value of money thus hindering consumption smoothing at the household level such an inflation induced increase in consumption risk at the micro level cannot be captured by representative agent models or the bailey triangle although the development of financial intermediation can mitigate the problem with realistic credit limits the welfare loss of moderate inflation still remains several times larger than estimations based on the bailey triangle our findings provide a strong justification for adopting a low inflation target by central banks especially in developing countries where money is the major form of household financial wealth

the case of the missing currency in late 1992 currency in the hands of the public was close to 300 billion representing nearly 30 percent of m1 one would think that an economic variable of this magnitude would be well analyzed and well understood quite the contrary the last serious surveys of currency holdings commissioned by the federal reserve were in 1984 and 1986 these surveys indicate that currency demand is not at all understood probably the most intriguing and newsworthy result of these surveys was that about 80 percent of currency holdings simply could not be explained despite the stir of general interest that followed those studies economists have shown little lasting interest in considering the implications of these findings this paper is written in hopes of stimulating more interest in currency behavior

aggregate and welfare effects of redistribution of wealth under inflation and price level targeting abstract an unanticipated rise in the price level redistributes wealth from lenders to borrowers its size depends on the monetary policy regime as inflation targeting it and price level targeting pt have different implications for the price level path following price level movements the effects of an unexpected 1 price level increase are measured and assessed under both regimes overall the redistribution of wealth and the implied aggregate and welfare effects are larger under it than they are under pt the youngest the poorest and the government gain at the expense of the rest of the population and when the government gain is given to households as lump sum transfers the effects on gdp are negative and long lasting

economic growth and environmental degradation the environmental kuznets curve and sustainable development abstract in this paper we critically examine the concept of the environmental kuznets curve ekc it proposes that there is an inverted u shape relation between environmental degradation and income per capita so that eventually growth reduces the environmental impact of economic activity the concept is dependent on a model of the economy in which there is no feedback from the quality of the environment to production possibilities and in which trade has a neutral effect on environmental degradation the actual violation of these assumptions gives rise to fundamental problems in estimating the parameters of an ekc the paper identifies other econometric problems with estimates of the ekc and reviews a number of empirical studies the inference from some such ekc estimates that further development will reduce environmental degradation is dependent on the assumption that world per capita income is normally distributed when in fact median income is far below mean income we carry out simulations combining ekc estimates from the literature with world bank forecasts for economic growth for individual countries aggregating over countries to derive the global impact within the horizon of the bank s forecast 2025 global emissions of so 2 continue to increase forest loss stabilizes before the end of the period but tropical deforestation continues at a constant rate throughout the period

a quantitative analysis of inflation as a tax on the underground economy abstract inflation rates are more dispersed and are persistently higher in developing countries this paper quantifies the importance of the public finance motive for inflation in the presence of a tax evading sector the underground economy the approach is motivated by the observation that the underground economy is especially large in poor countries the analysis builds on a general equilibrium monetary model with two production sectors where income in one of the sectors cannot be taxed a benevolent government finances its budget using an optimal combination of the income tax rate and the inflation rate the model is first calibrated to the u s economy and is then used for a cross country simulation the resulting relationships between the size of an underground economy inflation rate income tax rate and the share of seigniorage in the government revenue rationalize the cross country data quantitatively well

on inflation as a regressive consumption tax abstract evidence on the portfolio holdings and transaction patterns of households suggests that the burden of inflation is not evenly distributed we build a monetary growth model consistent with key features of cross sectional household data and use this framework to study the distributional impact of inflation at the aggregate level our model economy behaves similar to standard monetary growth models within the representative agent abstraction inflation has however important distributional effects since it is effectively a regressive consumption tax thus neglecting the distributional consequences of inflation may prove misleading in assessing the effects of inflation in our economy

money holdings inflation and welfare in a competitive market this paper examines an environment where money is essential and agents exchange in perfectly competitive walrasian markets agents consume and produce a homogeneous good but hold money to purchase consumption in the event of a relatively low productivity shock a walrasian market delivers a non degenerate distribution of money holdings across agents and avoids some of the computational difficulties associated with the market and pricing assumptions of bilateral matching and bargaining common to search theoretic environments the model is calibrated to long run us velocity and the welfare costs of inflation are assessed for variable buyer seller ratios and persistent states of buying and selling

the redistributive effects of inflation and the shape of money demand abstract i quantify the distributional effects of expected inflation in a sample of oecd countries using a microfounded model of money where agents differ in their consumption risk against which they can insure using money and government bonds the model is calibrated using harmonized wealth microdata from the luxembourg wealth study i find that the inflation tax is progressive for low inflation levels but it becomes regressive as inflation increases cut off points vary across countries and depend on discount factors and heterogeneity in consumption risk across agents moreover i find that the magnitude of inflation s distributional impact depends not only on wealth distribution but also and importantly on the curvature and height of the money demand curve indeed a higher and less elastic money demand leads to more regressive effects of inflation thus implying such effects are not necessarily stronger in a country with a more unequal wealth distribution

monetary policy transmission in the united kingdom a high frequency identification approach abstract this paper investigates the impact of monetary policy shocks on macroeconomic and financial variables in the united kingdom using a new series of high frequency monetary policy surprises employing our surprises as an instrument in a monthly svar over the uk s inflation targeting period we show that a monetary policy tightening induces a decline in economic activity and in cpi an appreciation of the pound a reduction in bank credit and a significant increase in mortgage and corporate bond spreads uk monetary policy also affects foreign credit spreads consistent with the extensive presence of large international players in the uk financial intermediation sector we finally propose a novel test of overidentifying restrictions which exploits the availability of the narrative series of monetary policy shocks constructed by cloyne and hurtgen 2016 and find that our high frequency monetary policy surprises are not significantly affected by non monetary news

monetary policy and wealth inequality over the great recession in the uk an empirical analysis abstract we use detailed micro information at household level from the wealth and assets survey to construct measures of wealth inequality from 2006 to 2018 at the monthly frequency we investigate the dynamic relationship between monetary policy and the evolution of wealth inequality measures our findings suggest that expansionary monetary policy shocks lead to an increase in wealth inequality and contributed significantly to its fluctuations this effect is heterogenous across the wealth distribution with the monetary shock affecting the median household relative to the 10th and 20th percentile by a larger amount than the right tail our results suggest that the shock is transmitted through changes in net property and financial wealth

happiness and health two paradoxes abstract this paper aims to establish systematic relationships between the two rapidly growing research streams on the socio economic determinants of happiness and health although they have been pursued quite independently by different communities of researchers empirical evidence points to very similar underlying causal mechanisms in particular in both cases per capita income seems to play a major role only up to a very low threshold beyond which relative income and other relational factors become crucial for happiness and health on the basis of these structural analogies we argue that a process of cross fertilisation between these two research streams would contribute to their development by clarifying the relationship between happiness health and their determinants finally we observe that the two literatures have converging policy implications measures meant to reduce poverty and inequality and invest in social and environmental capital may improve both health and happiness of the individuals

economic growth and atmospheric pollution in spain discussing the environmental kuznets curve hypothesis abstract the environmental kuznets curve ekc hypothesis posits an inverted u relationship between environmental pressure and per capita income recent research has examined this hypothesis for different pollutants in different countries despite certain empirical evidence showing that some specific environmental pressures have diminished in developed countries the hypothesis could not be generalized to the global relationship between economy and environment at all in this article we contribute to this debate analyzing the trends of annual emission flux of six atmospheric pollutants in spain the study presents evidence that there is not any correlation between higher income level and smaller emissions except for so2 whose evolution might be compatible with the ekc hypothesis the authors argue that the relationship between income level and diverse types of emissions depends on many factors thus it cannot be thought that economic growth by itself will solve environmental problems

price level changes and the redistribution of nominal wealth across the euro area we document the presence of sizable distributional effects from unexpected price level movements in the euro area ea using sectoral accounts and newly available data from the household finance and consumption survey the ea as a whole is a net winner of unexpected price level increases with italy greece portugal and spain being the biggest beneficiaries and belgium and malta being the largest losers governments are net winners of inflation while the household hh sector is a net loser in the ea as a whole hhs in belgium ireland malta and germany incur the biggest per capita losses while hhs in finland and spain turn out to be net winners of inflation considerable heterogeneity exists also within the hh sector relatively young middle class hhs are net winners of inflation while older and richer hhs are losers as a result wealth inequality in the ea decreases with unexpected inflation although in some countries austria germany and malta inequality increases due to presence of relatively few young borrowing hhs we document that hhs inflation exposure varies systematically across countries with hhs in high inflation ea countries holding systematically lower nominal exposures

buen vivir living well in ecuador community and environmental satisfaction without household material prosperity article i nfo this paper provides a quantitative approach to assessing whether the subjective wellbeing swb of ecuadorian people is dependent on income and employment or on more distinctive features relating to buen vivirethos the latter are reflected in the indigenous buen vivir ideology based mainly on relations with the community the environment and food sovereignty the empirical analysis shows that both buen vivir features and factors such as income and unemployment status are significant in the models explaining swb accordingly economic policies should take into account the buen vivir ethos that seems to be important for the swb of the ecuadorian people this supports the conservationist political position which focuses on protecting the environ ment and people s traditional livelihoods rather than the extractive view which regards people s welfare as merely dependent on income 2014 published by elsevier b v 1 in this paper we use the expressions buen vivir ethos buen vivir philosophy buen vivir ideologyorbuen vivirfeatures to refer to this original buen vivir that has grown from indigenous traditions harmonious coexistence with nature power sharing relationships and collective rights sense of community and local and primary production of food in a community s own territory for self consumption a compilation of texts on buen vivirphi losophy in the indigenous tradition can be found in hidalgo capitan et al 2014

financial sophistication and the distribution of the welfare cost of inflation abstract the welfare cost of anticipated inflation is quantified in a calibrated model of the u s economy that exhibits tractable equilibrium dispersion in wealth and earnings inflation does not generate large losses in societal welfare yet its impact varies noticeably across segments of society depending also on the financial sophistication of the economy if money is the only asset then inflation mostly hurts the wealthier and more productive agents while those poorer and less productive may even benefit from inflation the converse holds in a more sophisticated financial environment where agents can insure against consumption risk with assets other than money

effects of income inequality on population health new evidence from the european community household panel this study provides new evidence in order to explore the relationship between income inequality and health in the european union countries using new data from the european community household panel echp a variety of different specifications were tried using diverse dependent variables such as life expectancy at birth and child mortality the results show new support to the influence of income inequality on health indicators using aggregate data and panel techniques

the non monotonic relationship between seigniorage and inequality we present an analysis of how political factors may come into play in the equilibrium determination of inflation we employ a standard overlapping generations model with heterogenous young age endowments and a government that funds an exogenous spending via a combination of non distortionary income taxes and the inflation tax agents have access to two stores of value fiat money and an inflation shielded yet costly asset the model predicts that the relationship between elected reliance on the inflation tax for revenue and income inequality may be non monotonic we find robust empirical backing for this hypothesis from a cross section of countries jel classification e5 p16

extensive margins and the demand for money at low interest rates we argue that the relevant monetary decision for the majority of u s households is not the fraction of assets to be held in interest bearing form but whether to hold any such assets at all we call this the decision to adopt the financial technology we show that the key variable governing the adoption decision is the product of the interest rate times the total amount of assets this implies that the interest elasticity of household money demand at low interest rates can be estimated from the variation in asset holdings in a cross section of households rather than historical interest rate variations we do so with the 1989 survey of consumer finances we find that a the elasticity of money demand is very small when the interest rate is small b the probability that a household holds any amount of interest bearing assets is positively related to the level of financial assets and c the cost of adopting financial technologies is negatively related to participation in a pension program at intere

the case for a financial approach to money demand the distribution of money across households is much more similar to the distribution of financial assets than to that of consumption levels even controlling for life cycle effects this is a puzzle for theories which directly link money demand to consumption such as cash in advance cia money in the utility function miuf or shopping time models this paper shows that the joint distribution of money and nancial assets can be explained by an incomplete market model when frictions are introduced into financial markets money demand is modeled as a portfolio choice with a fixed transaction cost in financial markets

effects of inflation on wealth distribution do stock market participation fees and capital income taxation matter abstract the effects of a permanent change in inflation on the distribution of wealth are analyzed in a general equilibrium olg model that is calibrated with regard to the characteristics of the us economy poor agents accumulate savings predominantly in the form of money while rich agents participate in the stock market and accumulate equity higher inflation results in higher nominal interest rates and a higher real tax burden on interest income surprisingly an increase in inflation results in a lower stock market participation rate in addition savings decrease and the distribution of wealth becomes even more unequal

measuring the welfare costs of inflation in a life cycle model abstract in a neoclassical growth model with life cycle households in which money is held to satisfy a cash in advance constraint the optimal steady state inflation rate is absurdly high in excess of 20 lump sum age independent money injections twist and flatten the lifetime profile of utility making this profile look more like the one that would be chosen by a planner the cost of monetary finance of lump sum payments is the distortion introduced to the labor leisure choice

the welfare cost of inflation in a cash in advance economy with costly credit the paper presents a modification of the lucas stokey 1983 cash in advance economy in which the representative consumer decides based on relative prices which goods to buy with cash and which with costly credit an explicit baumol 1952 condition emerges that guides this consumer choice deriving and estimating a closed form welfare cost function in an example economy the paper shows that the welfare cost of inflation depends on the margins of substitution the consumer avoids inflation through costly credit and faces higher welfare costs of inflation than in standard cash in advance economies

formal contracts in fresh produce markets abstract transaction costs are endemic in the fresh produce industry because of the technical and economic characteristics of the products which give rise to high levels of uncertainty and the need for greater control in the supply chain the study reported here used an nie approach to explore the market conditions and producer motivation that determine the sale of citrus fruit in the comunidad valenciana and to suggest whether the introduction of standard seller buyer contracts would facilitate producers marketing decisions and reduce uncertainty thereby lowering transaction costs primary data collection involved conducting the first survey among spanish citrus producers in respect of their choice of marketing channels the population was the valencian mandarin and orange producers the results suggest that producers can be grouped according to their marketing orientation furthermore marketing factors in addition to the negotiated price were found to be important determinants of the terms of the transaction the research lends support to the policy debate for standardised citrus marketing contracts in the spanish citrus industry moreover the role of uncertainty as a major preoccupation of small scale producers and how it might be mitigated is probably of relevance to wider food markets

the welfare cost of inflation revisited the role of financial innovation and household heterogeneity notre analyse demontre que le ratio monnaie consommation augmente avec l ge des menages et decroit avec la consommation et que ce ratio a fortement augmente dans le contexte de tres bas taux d interet des dernieres annees nous elaborons un modele a generations imbriquees de la detention de monnaie pour des motifs de transaction dans lequel nous introduisons des effets d ge l utilisation de la monnaie augmente avec l ge des menages des effets de cohorte les jeunes generations font appel a des technologies financieres plus evoluees et des effets temporels les taux d interet nominaux influent sur la detention de monnaie

central bank policies and income and wealth inequality a survey this paper reviews recent research on the relationship between central bank policies and inequality a new paradigm which integrates sticky prices incomplete markets and heterogeneity among households is emerging which allows for the joint study of how inequality shapes macroeconomic aggregates and how macroeconomic shocks and policies affect inequality the new paradigm features multiple distributional channels of monetary policy most empirical studies however analyze each potential channel of redistribution in isolation our review suggests that empirical research on the effects of conventional monetary policy on income and wealth inequality yields mixed findings although there seems to be a consensus that higher inflation at least above some threshold increases inequality in contrast to common wisdom conclusions concerning the impact of unconventional monetary policies on inequality are also not clear cut to better understand policy effects on inequality future research should focus on the estimation of general equilibrium models with heterogeneous agents

inequality and mortality long run evidence from a panel of countries we investigate whether changes in economic inequality affect mortality in rich countries to answer this question we use a new source of data on income inequality tax data on the share of pretax income going to the richest 10 of the population in australia canada france germany ireland the netherlands new zealand spain sweden switzerland the uk and the us between 1903 and 2003 although this measure is not a good proxy for inequality within the bottom half of the income distribution it is a good proxy for changes in the top half of the distribution and for the gini coefficient in the absence of country and year fixed effects the income share of the top decile is negatively related to life expectancy and positively related to infant mortality however in our preferred fixed effects specification these relationships are weak statistically insignificant and likely to change their sign nor do our data suggest that changes in the income share of the richest 10 affect homicide or suicide rates

financial market segmentation stock market volatility and the role of monetary policy we explore the role of monetary policy in a world of segmented nancial markets where the agents who trade stocks encounter nancial income risk although the rest do not in such an economy we ask the question of how the monetary authority operates when it aims to maximize total welfare we nd that optimal monetary policy has the novel role of sharing the nancial market risk traders face among all agents in the economy this nding holds for any concave utility function and is not sensitive to the degree of market segmentation when risk is shared perfectly in this way consumption is equalized between the two groups and agents if given the choice would be indierent between participating or not in the nancial markets we also explore the implications that this policy has for the volatility of stock prices and of ination when compared to the policies of constant money supply ination targeting and nominal interest rate pegging we nd that optimal monetary policy is not necessarily associated either with minimal stock price volatility or with minimal ination volatility

the welfare cost of inflation under imperfect insurance abstract this paper examines the welfare cost of inflation in an economy where agents hold money in order to smooth consumption in the face of income variability for which there is no insurance the findings indicate that for the type of economies considered here the area under the empirical money demand curve is a poor measure of the welfare cost of inflation this area accounts for only one fourth of the true costs in the case of 5 inflation

a note on the link between income inequality and inflation abstract using the most recent data on income inequality i find that countries with greater inequality have higher mean inflation even after accounting for standard country specific inflation correlates

when are stabilizations delayed alesina drazen revisited abstract in an influential article alesina and drazen 1991 why are stabilizations delayed american economic review 81 1170 1188 model delay of stabilization as the result of a struggle between political groups supporting reform plans with different distributional implications in this paper we show that ex ante asymmetries in the costs of delay for the groups will reduce the probability of conflict and will lead to a shorter expected delay accurate common information about the cost of delay may lead to no delay at all in an asymmetric conflict a wider divergence in the distributional implications of reform will reduce the probability of conflict but will lead to a longer expected delay we motivate the asymmetric model of delay by reference to latin american episodes of the 1980s

disinflation inequality and welfare in a tank model we investigate the redistributive and welfare effects of disinflation in a two agent new keynesian tank model characterized by limited asset market participation lamp and wealth inequality we highlight two key mechanisms driving our long run results i the cash in advance constraint on firms working capital cia ii dividends endogeneity these two channels point in opposite directions lower inflation softens the cia and by raising labor demand lowers inequality but the disinflation also raises dividends and this increases inequality the disinflation is always welfare improving for asset holders we obtain ambiguous results for non asset holders who suffer substantial consumption losses during the transition

innocent bystanders monetary policy and inequality abstract we study the effects of monetary policy shocks on and their historical contribution to consumption and income inequality in the united states since 1980 as measured by the consumer expenditure survey contractionary monetary policy systematically increases inequality in labor earnings total income consumption and total expenditures furthermore monetary policy shocks account for a non trivial component of the historical cyclical variation in income and consumption inequality using detailed micro level data on income and consumption we document some of the different channels via which monetary policy shocks affect inequality as well as how these channels depend on the nature of the change in monetary policy

preferences inflation and welfare abstract this paper systematically examines how degrees of household risk aversion ra and elasticity of intertemporal substitution eis impact the welfare costs of inflation in a heterogeneous agent environment featuring capital and essential money empirical evidence suggests that households have degrees of ra and eis that differ on average from traditional values and display large amounts of dispersion capturing these empirical features of preference values in an otherwise standard model leads to welfare enhancements of inflation due to household substitution of money for capital the analysis also compares the welfare implications for alternative ways to implement monetary policy

monetary and fiscal policies in a heterogeneous agent economy i study the effects of long run inflation and income taxation in an economy where households face uninsurable idiosyncratic risks i construct a tractable competitive search framework that generates dispersion of prices income and wealth i analytically characterize the stationary equilibrium and the policy effects on individual choices quantitative analysis finds that monetary and fiscal policies have distinctive effects on macro aggregates such as output savings wealth dispersion income and consumption inequalities there can be a hump shape relationship between welfare and the respective policies overall welfare can be maximized by a deviation from the friedman rule paired with distortionary income taxation

distributional consequences of asset price inflation in the euro area we study the distributional consequences of housing price bond price and equity price increases for euro area households using data from the household finance and consumption survey hfcs the capital gains from bond price and equity price increases turn out to be concentrated among relatively few households while the median household strongly benefits from housing price increases the capital gains from bond price increases relative to household net wealth do not correlate with household net wealth or income bond price increases thus leave net wealth inequality largely unchanged in contrast equity price increases largely benefit the top end of the net wealth and income distribution thus amplify net wealth inequality housing price increases display a hump shaped pattern over the net wealth distribution with the poorest and richest households benefitting least with regard to the latter finding there exists considerable heterogeneity across euro area countries

central bank design with heterogeneous agents we study alternative institutional arrangements for the determination of monetary policy in a general equilibrium model with heterogeneous agents where monetary policy has redistributive effects inflation is determined by a policy board using either simple majority voting supermajority voting or bargaining we compare the equilibrium inflation rates to the first best allocation

models of quality adjusted life years when health varies over time survey and analysis quality adjusted life year qaly models are widely used for economic evaluation in the health care sector in the first part of the paper we establish an overview of qaly models where health varies over time and provide a theo retical analysis of model identification and parameter estimation from time trade off tto and standard gamble sg scores we investigate deterministic and probabilistic models and consider five different families of discounting functions in all the second part of the paper discusses four issues recurrently debated in the literature this discussion includes questioning the sg method as the gold standard for estimation of the health state index re examining the role of the constant proportional trade off condition revisiting the problem of double dis counting of qalys and suggesting that it is not a matter of choosing between tto and sg procedures as the combination of these two can be used to disen tangle risk aversion from discounting we find that caution must be taken when drawing conclusions from models with chronic health states to situations where health varies over time one notable difference is that in the former case risk aversion may be indistinguishable from discounting models of quality adjusted life years qalys are widely used as health related quality of life measures for economic evaluation in the health care sector in its simplest form the qaly approach assumes that the utility of a profile of health states over time may be estimated by adding the values of the constituent health states in the health profile in more sophisticated models health events occurring in the future may be discounted or risk adjusted

does unconventional monetary policy affect inequality evidence from japan inequality has been largely ignored in the literature and practice of monetary policy but is gaining more attention recently here we exclusively focus on the impact of unconventional monetary policy ump on inequality we look at how the recent ump in japan affected inequality using household survey data our vector auto regression var results show that ump widened income inequality after 2008q3 as the bank of japan boj resumed its zero interest rate policy and reinstated ump this is largely due to the portfolio channel to the best of our knowledge this is the first study to empirically analyse the distributional impact of ump japan s extensive experience with ump may hold important policy implications for other countries

the fed s monetary policy rule and u s inflation the case of asymmetric preferences abstract this paper investigates the empirical relevance of a new framework for monetary policy analysis in which the decision makers are allowed but not required to weight differently positive and negative deviations of inflation and output from the target values the estimates of the central bank s euler equation indicate that the preferences of the fed had been asymmetric only before 1979 with the interest rate response to output contractions being larger than the response to output expansions of the same magnitude we show that this asymmetry on output implied an average inflation bias around 1 5 while the implicit inflation target also declined the asymmetric preferences induced inflation bias appears to account for a sizable fraction of the historical decline in the inflation mean

taking the u out of kuznets a comprehensive analysis of the ekc and environmental degradation unlike most environmental kuznets curve ekc studies which focus on narrow measures of pollution as proxies for environmental quality we test the validity of the ekc using the ecological footprint ef a more comprehensive measure of environmental degradation we find no empirical evidence of an ekc relationship between the ef and economic development and only limited support for such a relationship among the components of the ef in addition we discover that energy is largely responsible for the lack of an ekc relationship and that energy consumption levels would have to be cut by over 50 in order for a statistically significant ekc relationship to emerge from the data overall these results suggest that growth alone will not lead to sustainable development

welfare consequences of gradual disinflation in emerging economies emerging economies display considerable inequality in monetary asset holdings rendering the recent disinflation nontrivial using a small open economy model with uninsurable idiosyncratic risk this paper shows that a gradual decline of 12 in the quarterly inflation rate leads to an aggregate welfare gain of 0 40 in consumption equivalent terms the poor gain less than the economy on aggregate despite holding a more inflation prone financial portfolio this is because unequal cash holdings make inflation tax payments of the poor much smaller than those of the rich when inflation tax revenues finance redistributive transfers that provide insurance cross sectional gains become even more dispersed

the welfare cost of inflation in general equilibrium abstract this paper presents a general equilibrium monetary model in which inflation distorts a variety of marginal decisions although individually none of the distortions is very large they combine to yield substantial welfare cost estimates a sustained 4 percent inflation like that experienced in the us since 1983 costs the economy the equivalent of 0 41 percent of output per year when currency is identified as the relevant definition of money and over 1 percent of output per year when m1 is defined as money the results illustrate how the traditional partial equilibrium approach can seriously underestimate the true cost of inflation

understanding the distributional impact of long run inflation the impact of fully anticipated inflation is systematically studied in heterogeneous agent economies with an endogenous labor supply and portfolio choices in stationary equilibrium inflation nonlinearly alters the endogenous distributions of income wealth and consumption small departures from zero inflation have the strongest impact three features determine how inflation impacts distributions and welfare financial structure shock persistence and labor supply elasticity when agents can self insure only with money inflation reduces wealth inequality but may raise consumption inequality otherwise inflation reduces consumption inequality but may raise wealth inequality given persistent shocks and an inelastic labor supply inflation may raise average welfare

optimal monetary policy distribution efficiency versus production efficiency this paper investigates the trade off between distribution effect and production effect of monetary policy when there exist unobservable idiosyncratic liquidity shocks in the absence of risk sharing arrangements such as a credit market monetary policy serves to provide ex post insurance to smooth consumption specifically issuing interest bearing bonds restores credit transactions on money through bond money exchanges such a policy has a positive distribution effect but the resulting inflation hampers production efficiency it is demonstrated that the trade off between distribution efficiency gain and production efficiency loss would result in net welfare enhancement if consumers are relative risk averse enough politique monetaire optimale efficacite dans la distribution versus efficacite dans la production ce memoire examine la relation d equivalence entre l effet sur la distribution et l effet sur la production de la politique monetaire quand existent des chocs de liquidite idiosyncratiques non observables en l absence d arrangement pour le partage des risques tel qu un marche du credit la politique monetaire sert d assurance ex post pour lisser les variations dans les niveaux de consommation specifiquement emettre des obligations qui paient des interets restore les transactions monetaires de credit via les echanges obligations monnaie une telle politique a un effet positif sur la distribution mais l inflation qui en resulte nuit a l efficacite de la production on montre que la relation d equivalence entre les gains d efficacite dans la distribution et la perte d efficacite dans la production resultent en une amelioration du niveau net de bien etre si les consommateurs ont une aversion suffisamment grande au risque relatif

the demand for bank reserves and other monetary aggregates the paper starts with haslag s 1998 model of the bank s demand for reserves and reformulates it with a cash in advance approach for both financial intermediary and consumer this gives a demand for a base of cash plus reserves that is not sensitive to who gets the inflation tax transfer it extends the model to formulate a demand for demand deposits yielding an m1 type demand and then includes exchange credit yielding an m2 type demand based on the comparative statics of the model it provides an interpretation of the evidence on monetary aggregates this explanation relies on the nominal interest as well as technology factors of the banking sector e31 e13 o42

inflation personal taxes and real output a dynamic analysis an examination using the overlapping generations approach of how the interactions between inflation and the nominal taxation of capital income affect the cyclical behavior of the u s economy

top wealth shares in the uk over more than a century abstract recent research highlighted controversy about the evolution of concentration of personal wealth in this paper we provide new evidence about the long run evolution of top wealth shares for the united kingdom the new series covers a long period from 1895 to the present and has a different point of departure from the previous literature we start with the analysis of the distribution of estates left at death we find that the application to the estate data of mortality multipliers to yield estimates of wealth among the living does not substantially change the degree of concentration over much of the period both in the uk and us allowing inferences to be made for years when this method cannot be applied the results show that wealth concentration in the uk remained relatively constant during the first wave of globalization but then decreased dramatically in the period from 1914 to 1979 the uk went from being more unequal in terms of wealth than the us to being less unequal however the decline in uk wealth concentration came to an end around 1980 and since then there is evidence of an increase in top shares notably in the distribution of wealth excluding housing in recent years we investigate the triangulating evidence provided by data on capital income concentration and on reported super fortunes

costly intermediation and consumption smoothing i introduction financial intermediaries play an essential role in economies transferring funds from agents who do not wish to use them immediately to those who do improving the allocation of resources with consequences for efficiency and welfare as hahn 1971 pointed out financial intermediation is not a costless activity it uses real resources such as labor and capital and governments often tax such activity this generates a wedge between the deposit and borrowing rates and consequently implies that households face different interest rates depending on whether they are savers or borrowers we construct a neoclassical growth model with costly intermediation in order to analyze two positive questions 1 what are the quantitative welfare implications of intermediation costs 2 are the welfare effects evenly distributed across individuals with different levels of wealth individuals in our neoclassical growth model face uninsurable idiosyncratic shocks to labor productivity an endogenous borrowing limit and costly intermediation households smooth consumption over time by making deposits at a financial intermediary in good times and running down credit balances or getting loans in bad times intermediation costs generate a wedge between loan and deposit rates with interest payments on loans higher than the return on deposits we assume that financial institutions provide all the intermediation and therefore abstract from direct borrowing and lending between households 1 as in martins da rocha and vailakis 2010 the intermediary has a labor intensive technology maximizes profit is remunerated by the marginal product of labor and takes regulation as given 2 see hahn 1971 diaz gimenez et al 1992 and mehra piguillem and prescott 2011 for similar approaches our goal is to analyze the effects of intermediation costs on agents intertemporal ability to smooth consumption and insure against labor income shocks as a consequence we focus on unsecured consumption loans such as personal loans and credit card debt and abstract from the effects of intermediation costs on entrepreneurship and productivity unsecured consumption loans while only a subset of the total credit market allow us to construct a direct measure of intermediation costs for our quantitative exercise in addition the fraction of unsecured credit over all credit in the data provides another dimension on which we can assess the performance of our model we use our model to measure key statistics of the u s economy including intermediation costs and perform counterfactual experiments reducing intermediation costs leads to two effects first for a given interest rate decreasing borrowing costs expands net borrowers consumption possibility frontiers and even current savers may benefit with positive probability they may need to borrow to smooth consumption in the future due to bad labor productivity shocks second there is an indirect effect lower intermediation costs imply an increase in the demand for loans which raises the interest rate this offsets part of the decrease in borrowing costs and also increases interest income improving savers welfare determining the net impact of these effects requires a quantitative analysis we interpret a reduction in intermediation costs as an improvement in the financial intermediation technology or a reduction in taxes on financial transactions the welfare analysis focuses on stationary equilibria and transitional dynamics the transition is slow and abstracting from it can lead to misleading welfare calculations also mobility in wealth means that comparing for instance the agent with median wealth in two stationary equilibria may not involve the same household we find three main quantitative results first intermediation costs have a large effect on welfare for the u s economy the average aggregate welfare gain of all agents from reducing intermediation costs from 3