CENTRAL BANK POLICIES AND INCOME AND WEALTH INEQUALITY: A SURVEY
By A. Colciago, A. Samarina, Jakob de Haan. Journal of economic surveys (Print), 2019
215 citations recorded by the source corpus.
This paper takes stock of the literature on the relationship between central bank policies and inequality. A new paradigm which integrates sticky-prices, incomplete markets and heterogeneity among households is emerging, which allows to jointly study how inequality shapes macroeconomic aggregates and how macroeconomic shocks and policies affect inequality. While the new paradigm features multiple distributional channels of monetary policy, most empirical analyses analyse each potential channel of redistribution in isolation. Our review suggests that empirical research on the effect of conventional monetary policy on income and wealth inequality yields very mixed findings, although there seems to be a consensus that higher inflation, at least above some threshold, increases inequality. In contrast to common wisdom, the conclusions concerning the impact of unconventional monetary policies on income inequality are also not clear cut. This is so since these policies may reduce income inequality by stimulating economic activity, but may also increase inequality by boosting asset prices. Similarly, results concerning the impact of unconventional monetary policies on wealth inequality are rather mixed. The scant literature on the impact of macro-prudential policies on inequality finds evidence for redistributive effects, but in view of its limitations it may be too early to come to conclusions.
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/ba2ca4a9ee5f0cb128c3c2b569f939065a50c59e
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In Economics and Econometrics
Citations in the corpus
- How Does Monetary Policy Affect Income and Wealth Inequality? Evidence from Quantitative Easing in the Euro Area (2018, background): “Recently, and especially since central banks have undertaken extensive asset purchase programmes to circumvent the lower bound on nominal interest rates, monetary policy has also been put forth as a possible driver of economic inequality (see Colciago et al., 2019, for a survey).”