The Redistributive Effects of Inflation on Spanish Households

Bianco, Danilo (2024): The Redistributive Effects of Inflation on Spanish Households.

Abstract

This paper examines the heterogeneous impact of inflation on Spanish households between 2021 and 2023, focusing on differences by age and income. The aim is to evaluate how price increases unequally burden households and redistribute welfare across different population segments. The analysis is conducted through the "consumption channel," which considers the effects of inflation based on the different consumption patterns of individuals. I use publicly available microdata to calculate household-specific inflation and to examine its composition. Then I run a linear regression analysis to explore the relationship between inflation and several other household characteristics. The results reveal how the main burden of inflation shifted from younger and lower-income households in 2021 and 2022, to older and wealthier households during the disinflationary period in 2023. Additionally, the study identifies consistent patterns that associate certain demographic characteristics with housing and food inflation over time. The findings contribute to the literature on inflation heterogeneity, demonstrating that the “inflation tax” does not affect all households equally and generates redistributional effects that merit consideration.

• Item Type: MPRA Paper
• Language: English
• Keywords: Inflation, Redistribution, Inflation Heterogeneity, Household-Specific Inflation, Consumption Channel, Microdata Analysis.
• Subjects: D - Microeconomics > D1 - Household Behavior and Family Economics > D12 - Consumer Economics: Empirical Analysis; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E21 - Consumption ; Saving ; Wealth; E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level ; Inflation ; Deflation

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