Publications

Public Policy Brief No. 38 | December 1997

Who Pays for Disinflation?

Disinflationary Monetary Policy and the Distribution of Income

Using theoretical predictions, econometric results, and the example of the Volcker disinflation, Willem Thorbecke establishes that through disinflation’s burden on the durable goods and construction industries, small firms, and low-wage workers and its benefits to bond market investors, it effects a redistribution of wealth from the poor to the rich. Because of this distributional consequence, he argues, engineering a disinflationary recession now to wring more inflation out of the economy would be inappropriate. On the contrary, with inflation as low as it is and with upward pressure on wages that could trigger a rise in inflation also low, now is the time for the Federal Reserve to let the economy grow—to seek policies that promote distributive justice and that help those individuals most at risk for shrinking income.


Publication Highlight

Book Series
Financial Regulation in the European Union
Edited by Rainer Kattel, Jan Kregel, and Mario Tonveronachi

November 2015

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