Inflation and the redistribution of nominal wealth

Matthias Doepke*, Martin Schneider

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

119 Scopus citations

Abstract

This study quantitatively assesses the effects of inflation through changes in the value of nominal assets. It documents nominal asset positions in the United States across sectors and groups of households and estimates the wealth redistribution caused by a moderate inflation episode. The main losers from inflation are rich, old households, the major bondholders in the economy. The main winners are young, middle-class households with fixed-rate mortgage debt. Besides transferring resources from the old to the young, inflation is a boon for the government and a tax on foreigners. Lately, the amount of U.S. nominal assets held by foreigners has grown dramatically, increasing the potential for a large inflation-induced wealth transfer from foreigners to domestic households.

Original languageEnglish (US)
Pages (from-to)1069-1097
Number of pages29
JournalJournal of Political Economy
Volume114
Issue number6
DOIs
StatePublished - Dec 2006

ASJC Scopus subject areas

  • Economics and Econometrics

Fingerprint Dive into the research topics of 'Inflation and the redistribution of nominal wealth'. Together they form a unique fingerprint.

Cite this