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

By John Silvia, Lorenz Kueng, Olivier Coibion, Yuriy Gorodnichenko

August 1, 2012

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John Silvia, Lorenz Kueng, Olivier Coibion, and Yuriy Gorodnichenko. Innocent Bystanders? Monetary Policy and Inequality in the U.S., (USA: International Monetary Fund, 2012) accessed September 20, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Consumption, Income, Income distribution, Income inequality, Labor, National accounts, Wages

Keywords: Business income, Composition channel, Consumption, Consumption Inequality, Contractionary monetary policy shock, Effects of monetary policy shock, Global, Household income, Income, Income category, Income composition channel, Income distribution, Income Inequality, Income side, Labor earnings, Monetary Policy, Monetary policy shock, Rate of inflation, Transfer income, Wages, WP

Publication Details

Pages:

57
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2012/199
Stock No:

WPIEA2012199
ISBN:

9781475505498
ISSN:

1018-5941

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