Who Wins, Who Loses from Inflation?

Abstract

Various groups are sometimes considered winners in an inflationary economy: welfare recipients with their ever-rising benefits; workers with their generous wage contracts; wealthy people with their capital invested in inflation hedges. But each of these groups might reply that it is the victim, and make a convincing case: poor people on fixed incomes; the average consumer taking a beating at the supermarket; the rich man watching his money depreciate. If the question were a matter of idle curiosity, we might not be greatly concerned. But as government fashions policies to stop inflation or cope with it while it lasts, the answer takes on importance. If we knew who was hurt most by inflation we could better decide how to ease its discomfort and how much we should give up to stop it. One way to approach the question is to look at a typical household income and expenditure statement, to learn where people get their money and how they use it. Each source of income and each use of it can be expected to behave in a different way during inflation. A comparison of households at various income levels in terms of their sources and uses of income will help to explain who wins and who loses from inflation.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 13 citations exist upstream.