Large devaluations and inflation inequality: Evidence from Brazil

Arbeitspapier

In the aftermath of large devaluations, prices of tradable goods/lower-priced varieties increase significantly more than the prices of nontradables/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 [2017]'s methodology, we show that inflation of poor households in Brazil was at least 11 percentage points higher than of the rich 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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 2020-05

Classification and Topics

• Classification: Wirtschaft ; Foreign Exchange ; Open Economy Macroeconomics ; Price Level; Inflation; Deflation
• Subject: Exchange Rate Devaluation ; Pass-Through ; Inflation ; Inequality

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Gouvêa, Raphael Rocha
• Event: Veröffentlichung
• (who): University of Massachusetts, Department of Economics
• (where): Amherst, MA
• (when): 2020

Further information

• Handle: http://hdl.handle.net/10419/227896
• Last update: 10.03.2025, 11:43 AM CET