Inflation, Financial Developments, and Wealth Distribution
Electronic Access:
Free Download. Use the free Adobe Acrobat Reader to view this PDF file
Summary:
We find that from 1995 to 2002 in China, the dispersion of wealth decreased, the moneywealth ratio increased for all wealth levels and the aggregate money-output ratio increased. We develop a two-asset dynamic general equilibrium model in which households face a portfolio adjustment cost and a borrowing constraint. We find that financial development lowers the dispersion of wealth by reducing the precautionary motive of households. In addition, tight monetary policies increase the value of money and thus increase the moneywealth ratio for all wealth levels and the aggregate money-output ratio.
Series:
Working Paper No. 2016/132
Subject:
Consumption Fiscal policy Income Income distribution Income shocks Inflation National accounts Personal income Prices
English
Publication Date:
July 6, 2016
ISBN/ISSN:
9781498352826/1018-5941
Stock No:
WPIEA2016132
Pages:
51
Please address any questions about this title to publications@imf.org