Note: The views expressed in the article are those of the author and not necessarily those of the institutions the authors are affiliated to. We wish to thank the participants at the XXI SIEP Conference held in Pavia, September 2009, for their suggestions. Insightful comments from two anonymous referees and from Stephan Klasen are gratefully acknowledged. Remaining errors are ours.
Relative Price Changes and Households' Welfare in Italy
Article first published online: 30 JUL 2012
© 2012 The Authors. Review of Income and Wealth © International Association for Research in Income and Wealth 2012
Review of Income and Wealth
Volume 58, Issue 4, pages 675–714, December 2012
How to Cite
Cepparulo, A., Gastaldi, F., Liberati, P. and Pisano, E. (2012), Relative Price Changes and Households' Welfare in Italy. Review of Income and Wealth, 58: 675–714. doi: 10.1111/j.1475-4991.2012.00515.x
- Issue published online: 4 NOV 2012
- Article first published online: 30 JUL 2012
- relative prices;
The entrance of Italy in the Euro area in 2001 has given rise to a wide debate about the perception of inflation on households' well-being. However, most of the debate has involved the measurement of the “correct” consumer price index at the national level. Much less analysis has been carried out on the distributional consequences of inflation on every household. The paper addresses this issue by performing a microsimulation analysis of the impact of inflation on Italian households in the period 1997–2007. It is shown that the impact of inflation has an ambiguous path over the period, with a large concentration of welfare losses around the introduction of the Euro currency. In particular, it is found that poorer and larger households are severely hurt by inflation and that the prices of gas and gasoline are largely responsible for determining the living conditions of Italian households.