The Effect of Inflation on Wage Inequality: A North-South Monetary Model of Endogenous Growth with International Trade

• Type: Article in International Scientific Journal
• Date: 2023-02

Authors

Óscar Afonso (Author) FEP; Sequeira, T (Author) Other

Journal

Title: Journal of Money, Credit and Banking

Vol. 55 No. 1

Pages: 215-249

ISSN: 0022-2879

Publisher: Wiley-Blackwell

Indexing

ISI Web of Knowledge - 15 Citations

Scopus - 13 Citations

Other information

Authenticus ID: P-00V-ZX3

DOI: 10.1111/jmcb.12914

Abstract (EN): This study analyzes the effects of inflation on intra- and intercounty wage inequality, specialization, and growth, using a North-South endogenous growth model with international trade and money. The relationship between inflation and intracountry wage inequality depends on firms' credit constraints and on the inflation levels. Our results indicate that inflation decreases specialization in skilled production and increases intracountry wage inequality. Moreover, increasing inflation in the South increases the wage inequality gap between countries. Theoretical results are confirmed through calibration and match with existing empirical evidence.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 35