Distributional Impacts of Inflation Accounting for Behavioral Effects and Real Assets

This paper analyzes the redistributive effects of inflation across 18 European economies from 2021:Q3 to 2022:Q2, using unique micro-datasets for this country sample. We estimate inflation’s impact on household welfare through the consumption basket, income, and wealth channels. Our main contribution is incorporating real assets into the wealth channel and accounting for behavioral responses to inflation in both the income and wealth channels. These factors significantly alter inflation’s distributional effects compared to previous literature. The inflation shock is estimated to have caused an average welfare loss equivalent to 18.5 percent of annual household income across our sample, with households in the poorest income quintiles suffering the largest losses. Cross-country differences also widen when real assets are incorporated, with a few economies even showing welfare gains for some or all quintiles because house prices rose faster than inflation.

Authors

Publication Details

Journal
IMF Working Paper
Published
2026-02-01
DOI
https://doi.org/10.5089/9798229038430.001
Primary Topic
Financial Literacy, Pension, Retirement Analysis
Type
article
Field-Weighted Citation Impact
0.00
Controls
|||
ALL TIME
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
article

Distributional Impacts of Inflation Accounting for Behavioral Effects and Real Assets

Alberto Tumino, Marcos Poplawski Ribeiro, Julieth Pico-Mejia, Kardelen Cicek
IMF Working Paper
Financial Literacy, Pension, Retirement Analysis
article

Distributional Impacts of Inflation Accounting for Behavioral Effects and Real Assets

Alberto Tumino, Marcos Poplawski Ribeiro, Julieth Pico-Mejia, Kardelen Cicek
article en

Abstract

This paper analyzes the redistributive effects of inflation across 18 European economies from 2021:Q3 to 2022:Q2, using unique micro-datasets for this country sample. We estimate inflation’s impact on household welfare through the consumption basket, income, and wealth channels. Our main contribution is incorporating real assets into the wealth channel and accounting for behavioral responses to inflation in both the income and wealth channels. These factors significantly alter inflation’s distributional effects compared to previous literature. The inflation shock is estimated to have caused an average welfare loss equivalent to 18.5 percent of annual household income across our sample, with households in the poorest income quintiles suffering the largest losses. Cross-country differences also widen when real assets are incorporated, with a few economies even showing welfare gains for some or all quintiles because house prices rose faster than inflation.

IMF Working PaperVol. 2026(022)
No poverty
Openalex Percentile: Top 64%
Financial Literacy, Pension, Retirement Analysis
AI Navigator

Ask Laika to Summarize, Analyze, and Connect papers live on the map.

Summarize Papers & Methodologies

Extract key findings, datasets, and comparative methods across publications.

Benchmark Rankings & Visual Analytics

Rank top research institutions, authors, funders, topics, and journals by Field-Weighted Citation Impact (FWCI) and paper volume with instant charts.

Connect Distant Disciplines

Bridge topological clusters on the map to find hidden collaborative intersections.