Working Paper Number
In the aftermath of large devaluations, prices of tradable goods and lower-priced varieties increase significantly more than the prices of nontradables and higher-priced varieties. These relative price changes may lead to inflation inequality when household consumption baskets are different across the distribution of income. Using Cravino and Levchenko ’s methodology, we show that inflation for poor households in Brazil was at least 11 percentage points higher than for rich ones in the aftermath of the 2002 large devaluation. A detailed case study of the City of São Paulo estimates an inflation inequality ranging from 8 to 11 percentage points in the city.
UMass Amherst Open Access Policy
Gouvea, Raphael Rocha, "Large Devaluations and Inflation Inequality: Evidence from Brazil" (2020). UMass Economics Working Papers. 288.