Who bears the costs of inflation? Euro area households and the 2021-2023 shock

Mon, 01 Jan 2024 00:00:00 +0000

This paper measures the heterogeneous first-order welfare effects of the 2021-2023 inflation surge across households in the four largest euro area countries (Germany, France, Italy, Spain). Motivation: euro area headline HICP inflation peaked at 10.6% (year-on-year) in October 2022, driven mainly by energy and food prices following Russia’s invasion of Ukraine; cumulatively over 2021-23 the price index rose roughly 14% in France and Spain, 16% in Italy and 20% in Germany. The classic question—who wins and who loses from surprise inflation, and through which channels—is the focus.

Gonzalo Paz-Pardo | Macro Paper Warehouse

Who bears the costs of inflation? Euro area households and the 2021-2023 shock