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

Author/Editor: John Silvia ; Lorenz Kueng ; Olivier Coibion ; Yuriy Gorodnichenko
Publication Date: August 01, 2012
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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.
Series: Working Paper No. 12/199
Subject(s): External shocks | Income distribution | Prices

Author's Keyword(s): Monetary Policy | Income Inequality | Consumption Inequality
Publication Date: August 01, 2012
ISBN/ISSN: 9781475505498/1018-5941 Format: Paper
Stock No: WPIEA2012199 Pages: 57
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