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The Redistributive Effects of Inflation on Spanish Households

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  • Bianco, Danilo

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.

Suggested Citation

  • Bianco, Danilo, 2024. "The Redistributive Effects of Inflation on Spanish Households," MPRA Paper 122176, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:122176
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    References listed on IDEAS

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    1. Gürer Eren & Weichenrieder Alfons, 2020. "Pro-rich inflation in Europe: Implications for the measurement of inequality," German Economic Review, De Gruyter, vol. 21(1), pages 107-138, April.
    2. Masuch, Klaus & Anderton, Robert & Setzer, Ralph & Benalal, Nicholai, 2018. "Structural policies in the euro area," Occasional Paper Series 210, European Central Bank.
    3. Bart Hobijn & David Lagakos, 2005. "Inflation Inequality In The United States," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 51(4), pages 581-606, December.
    4. Bodnár, Katalin & Schuler, Tobias, 2022. "The surge in euro area food inflation and the impact of the Russia-Ukraine war," Economic Bulletin Boxes, European Central Bank, vol. 4.
    5. Rubene, Ieva & Koester, Gerrit, 2021. "Recent dynamics in energy inflation: the role of base effects and taxes," Economic Bulletin Boxes, European Central Bank, vol. 3.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Inflation; Redistribution; Inflation Heterogeneity; Household-Specific Inflation; Consumption Channel; Microdata Analysis.;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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