What is the effect of imported inflation and central bank credibility on the poor and rich?

This study analyzes two phenomena regarding the inflation of the poor and rich. Firstly, considering that imported inflation is a source of inflation, we investigate whether the harmful effect of imported inflation is higher for the poor than the rich. Secondly, assuming that central bank credibilit...

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Bibliographic Details
Published inApplied economics Vol. 56; no. 21; pp. 2520 - 2543
Main Authors de Mendonça, Helder Ferreira, Trigo, Natália Ferreira
Format Journal Article
LanguageEnglish
Published London Routledge 02.05.2024
Taylor & Francis Ltd
Subjects
central bank credibility
Central banks
Credibility
Economic analysis
Economic theory
headline and food inflation
Households
Imported inflation
Inflation
inflation of poor and rich
Low income groups
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Summary:This study analyzes two phenomena regarding the inflation of the poor and rich. Firstly, considering that imported inflation is a source of inflation, we investigate whether the harmful effect of imported inflation is higher for the poor than the rich. Secondly, assuming that central bank credibility helps keep inflation under control and that the poor are more susceptible to the damaging effect of the inflation tax, we evaluate whether the credibility is more beneficial to the poor. Based on data from the Brazilian economy, the findings indicate a higher effect of imported inflation on food inflation and poor households. In contrast, central bank credibility effectively reduces inflation for the poor.
ISSN:0003-6846
1466-4283
DOI:10.1080/00036846.2023.2192031