Cover IMF Working Papers
Inflation, Financial Developments, and Wealth Distribution
Author:
Wai-Yip Alex Ho
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and
Chun-Yu Honull

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Series:
IMF Working Papers
Volume/Issue:
Volume 2016: Issue 132
Language:
English
Publication Date:
06 Jul 2016
DOI:
https://doi.org/10.5089/9781498352826.001
ISBN:
9781498352826
ISSN:
1018-5941
Pages:
51
Keywords:
WP; adjustment cost; fiscal policy; inflation rate; Inflation; Borrowing Constraint; Heterogeneous Agents; Wealth Distribution; income process; calibrated economy; money-wealth ratio; financial assets holding; private-sector financial asset; Personal income; Income distribution; Consumption; Income shocks; Global; Wai-yip Alex Ho; wealth composition; Income
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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We find that from 1995 to 2002 in China, the dispersion of wealth decreased, the moneywealth ratio increased for all wealth levels and the aggregate money-output ratio increased. We develop a two-asset dynamic general equilibrium model in which households face a portfolio adjustment cost and a borrowing constraint. We find that financial development lowers the dispersion of wealth by reducing the precautionary motive of households. In addition, tight monetary policies increase the value of money and thus increase the moneywealth ratio for all wealth levels and the aggregate money-output ratio.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2016: Issue 132