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THE DISTRIBUTIONAL EFFECTS OF THE 1969–75 INFLATION ON HOLDINGS OF HOUSEHOLD WEALTH IN THE UNITED STATES *
Author(s) -
Wolff Edward N.
Publication year - 1979
Publication title -
review of income and wealth
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.024
H-Index - 57
eISSN - 1475-4991
pISSN - 0034-6586
DOI - 10.1111/j.1475-4991.1979.tb00093.x
Subject(s) - economics , inflation (cosmology) , debt , stock (firearms) , asset (computer security) , national wealth , inequality , demographic economics , wealth effect , distribution (mathematics) , monetary economics , labour economics , macroeconomics , geography , finance , mathematical analysis , physics , computer security , mathematics , archaeology , theoretical physics , computer science
Using a simple simulation model, this paper assesses the impact of relative movements in asset prices on the distribution of wealth during the 1969–75 period. Because of the strong negative correlation between wealth level and the ratio of debt to wealth, this particular inflation induced a substantial drop in the overall level of wealth inequality. Moreover, comparing the portfolios of different demographic groups, we found that middle‐aged households gained relatively to younger and older ones, married couples gained relatively to singles, whites gained relatively to non‐whites, and home‐owners gained relatively to renters. The biggest gainers from this inflation were home‐owners with large mortgages and the biggest losers the large stock holders.