Innocent Bystanders? Monetary Policy and Inequality in the U.S.

By Olivier Coibion, Y. Gorodnichenko, Lorenz Kueng, John E. Silvia. Social Science Research Network, 2012

183 citations recorded by the source corpus.

We study the effects and historical contribution of monetary policy shocks to consumption and income inequality in the United States since 1980. Contractionary monetary policy actions systematically increase inequality in labor earnings, total income, consumption and total expenditures. Furthermore, monetary shocks can account for a significant component of the historical cyclical variation in income and consumption inequality. Using detailed micro-level data on income and consumption, we document the different channels via which monetary policy shocks affect inequality, as well as how these channels depend on the nature of the change in monetary policy.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/f941b6b04e3eff7c4b36a518879df0a51269b97e

Citations in the corpus

• Conventional and unconventional monetary policy vs. households income distribution: An empirical analysis for the Euro Area (2017, unknown): “The influential paper of Coibion et al. (2012) reports positive redistributive effects of an expansionary monetary policy in U.S. over the period 1980–2008 because of the asymmetric effect of a change in the policy interest rate on labor earnings along the income distribution, while Davtyan (2016)…”
• Do Banks Pass Through Credit Expansions to Consumers Who Want to Borrow (2015, unknown): “A second caveat is that our paper does not assess the desirability of stimulating household borrowing from a macroeconomic 4A related literature has analyzed heterogeneity in the transmission of monetary policy through other channels (Doepke and Schneider, 2006; Coibion et al., 2012; Auclert, 2014; ”
• The Credit Line Channel (2020, unknown): “The shock series is taken from Coibion et al. (2017) and the remaining data are obtained from St. Louis Fed’s FRED database (see Appendix Table B.1 for details about the data).”
• The effects of quasi-random monetary experiments (2020, unknown): “By conditioning on central bank forecasts available at the time of the policy decision, researchers devised another measure of plausibly random surprises to policy—see Romer and Romer (2004), and the subsequent literature such as Cloyne and Hürtgen (2016) or Coibion et al. (2017).”
• Measuring Uncertainty and Its Impact on the Economy (2016, unknown): “The monetary policy shocks of Coibion et al. (2017) update the estimates of Romer and Romer (2004).”
• The Impact of Monetary Policy on Inequality in the UK. An Empirical Analysis (2017, unknown): “It is interesting to note that these estimates are similar to those obtained by Coibion et al. (2012) for US data.”
• Does unconventional monetary policy affect inequality? Evidence from Japan (2014, unknown): “In addition to this effect, we find evidence of the savings redistribution channel (Coibion et al., 2012).”
• Regional Heterogeneity and Monetary Policy (2019, unknown): “To help document the extent to which refinancing patterns differed spatially after QE1, we use a variety of different data sources.”