On inflation as a regressive consumption tax

Andrés Erosa, Gustavo Ventura

Research output: Contribution to journalArticlepeer-review

158 Scopus citations


Evidence on the portfolio holdings and transaction patterns of households suggests that the burden of inflation is not evenly distributed. We build a monetary growth model consistent with key features of cross-sectional household data and use this framework to study the distributional impact of inflation. At the aggregate level, our model economy behaves similar to standard monetary growth models within the representative agent abstraction. Inflation has, however, important distributional effects since it is effectively a regressive consumption tax. Thus, neglecting the distributional consequences of inflation may prove misleading in assessing the effects of inflation in our economy.

Original languageEnglish (US)
Pages (from-to)761-795
Number of pages35
JournalJournal of Monetary Economics
Issue number4
StatePublished - 2002
Externally publishedYes


  • Distribution
  • Heterogeneity
  • Inflation

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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