Pro-rich inflation in Europe: Implications for the measurement of inequality

Date

2020-04-01

Author

Gürer, Eren
Weichenrieder, Alfons

Metadata

Show full item record

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Item Usage Stats

56
views

0
downloads

This paper studies the distributional consequences of a systematic variation in expenditure shares and prices. Using European Union Household Budget Surveys and Harmonized Index of Consumer Prices data, we construct household-specific price indices and reveal the existence of a pro-rich inflation in Europe. Over the period 2001-15, the consumption bundles of the poorest deciles in 25 European countries have, on average, become 11.2 percentage points more expensive than those of the richest deciles. We find that ignoring the differential inflation across the distribution underestimates the change in the Gini (based on consumption expenditure) by almost up to 0.04 points. Cross-country heterogeneity in this change is large enough to alter the inequality ranking of numerous countries. The average inflation effect we detect is almost as large as the change in the standard Gini measure over the period of interest.

Subject Keywords

Inequality, Gini, EU countries, income dependent inflation

URI

https://hdl.handle.net/11511/101699

Journal

GERMAN ECONOMIC REVIEW

DOI

https://doi.org/10.1515/ger-2018-0146

Collections

Department of Economics, Article

Suggestions

OpenMETU
Core

Inflation across income groups: the case of Turkey Çelik, Duygu; Parmaksız, Ömer Kağan; Cömert, Hasan; Department of Economics (2020-10) This study, covering the period from 2004 to 2018, investigates the inflation differentials across income groups and the determinants of group-specific inflation in Turkey. We use the micro-data from the Household Budget Survey and consumer price data to calculate group-specific inflation rates. We find that inflation differentials across income groups vary throughout time in Turkey. Lower-income groups have higher inflation exposures in first half the period under investigation, especially between 20...
Information in the financial news: effect of market commentary on stock market performance Giray, Aynur; Danışoğlu, Seza; Department of Business Administration (2012) This paper studies the effect of investment sentiment on asset prices. A sentiment proxy is calculated by performing content analysis on the Wall Street Journal‘s "Heard on the Street‘ columns. This proxy is extracted by the principal component analysis of the word tags from the Harvard psychological dictionary that is used by the content analysis software General Inquirer. The relationship between stock prices, trading volume and the media sentiment proxy is estimated within the VAR context. Results sugges...
Yield curve estimation and prediction with Vasicek Model Bayazıt, Derviş; Hayvafi, Azize; Department of Financial Mathematics (2004) The scope of this study is to estimate the zero-coupon yield curve of tomorrow by using Vasicek yield curve model with the zero-coupon bond yield data of today. The raw data of this study is the yearly simple spot rates of the Turkish zero-coupon bonds with different maturities of each day from July 1, 1999 to March 17, 2004. We completed the missing data by using Nelson-Siegel yield curve model and we estimated tomorrow yield cuve with the discretized Vasicek yield curve model.
Pro-rich Inflation and Optimal Income Taxation Gürer, Eren; Weichenrieder, Alfons J. (2021-11-01) We study the implications of an increase in the price of necessities, which disproportionally hurts the poor, for optimal income taxation. When the government is utilitarian and disutility from labor supply is linear, the optimal nominal taxes and transfers are unchanged as households supply more labor to secure their consumption expenditures. Quantitative analyses with convex disutility of labor supply reveal that, because of positive labor supply effects, keeping average tax rates constant suffices to opt...
Macroeconomic announcements and intraday stock market volatility Yılmaz, Berna Nisa; Danışoğlu, Seza; Department of Financial Mathematics (2017) This study examines the effects of interest and inflation rate announcements on stock market volatility by using a standard event study methodology. The BIST-30 Index volatility is modelled and forecasted by the multiplicative component GARCH model. This is one of the first studies where the announcement effects are analyzed on the basis of volatility forecasts produced by the multiplicative component GARCH. The announcement effects are observed clearly with the advantage of using high-frequency data. While...

Citation Formats

E. Gürer and A. Weichenrieder, “Pro-rich inflation in Europe: Implications for the measurement of inequality,” GERMAN ECONOMIC REVIEW, vol. 21, no. 1, pp. 107–138, 2020, Accessed: 00, 2023. [Online]. Available: https://hdl.handle.net/11511/101699.