The effects of monetary policy shocks on inequality
By Davide Furceri, Prakash Loungani, A. Zdzienicka. Journal of International Money and Finance, 2016
296 citations recorded by the source corpus.
This paper provides new evidence of the effect of conventional monetary policy shocks on income inequality. We construct a measure of unanticipated changes in policy rates—changes in short-term interest rates that are orthogonal to unexpected changes in growth and inflation news—for a panel of 32 advanced and emerging market countries over the period 1990–2013. Our main finding is that contractionary monetary policy shocks increase income inequality, on average. The effect is asymmetric—tightening of policy raises inequality more than easing lowers it—and depends on the state of the business cycle. We find some evidence that the effect increases with the share of labor income and is mitigated by redistribution policies. Finally, while an unexpected increase in policy rates increases inequality, changes in policy rates driven by an increase in growth and inflation are associated with lower inequality.
Subfields: Economics and Econometrics, Finance
View Paper: https://www.semanticscholar.org/paper/ed6180cd567bcb46ad9059bcf105def6d6c0137f
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Citations in the corpus
- CENTRAL BANK POLICIES AND INCOME AND WEALTH INEQUALITY: A SURVEY (2019, unknown): “, 2019), the UK (Mumtaz and Theophilopoulou, 2015, 2017), the euro area (Guerello, 2018; Samarina and Nguyen, 2018), and in a panel of advanced and emerging countries (Furceri et al., 2018).”
- How Does Monetary Policy Affect Income and Wealth Inequality? Evidence from Quantitative Easing in the Euro Area (2018, background): “…countries, notably Mumtaz and Theophilopoulou (2017) for the UK, Guerello (2018) for the euro area, Amberg et al. (2022) and Coglianese et al. (2021) for Sweden, Andersen et al. (2023) for Denmark 5 , and Furceri et al. (2018) in a panel data study of 32 advanced and emerging market countries.”