Innocent Bystanders? Monetary Policy and Inequality in the U.S.
August 1, 2012
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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
Pages:
57
Volume:
2012
DOI:
Issue:
199
Series:
Working Paper No. 2012/199
Stock No:
WPIEA2012199
ISBN:
9781475505498
ISSN:
1018-5941
