Foreign price shocks have significant effects on functional income distribution and on inflation inequality. By increasing prices in domestic currency that are linked to foreign prices, they increase the profit share in some sectors and reduce real wages, in particular of workers whose...

This article shows that income inequality and inflation in Brazil are multidimensional phenomena linked to the unemployment rate and to the foreign sector. Consequently, the relationship between inflation and income distribution depends on the source of inflationary pressures, as evident in the...