Distributional Effects of Monetary Policy
IMF Working Papers, July 30, 2021
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- Distributional Effects of Monetary Policy
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Bibliographic details
- Authors: Valentina Bonifacio, Luis Brandao Marques, Balazs Csonto, Chiara Fratto, Philipp Engler, Davide Furceri, Deniz O Igan, Rui Mano, Machiko Narita, Murad Omoev, Gurnain Kaur Pasricha, Hélène Poirson
- Published: July 30, 2021
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513588858.001
Overview
- Title: Distributional Effects of Monetary Policy
- Authors: Valentina Bonifacio, Luis Brandão-Marques, Balazs Csonto, Chiara Fratto, Philipp Engler, Davide Furceri, Deniz O Igan, Rui Mano, Machiko Narita, Murad Omoev, Gurnain Kaur Pasricha, Hélène Poirson
- Publication date: July 30, 2021
- Series: IMF Working Papers, Working Paper No. 2021/201
- Pages: 47
- Volume: 2021
- Issue: 201
- DOI: https://doi.org/10.5089/9781513588858.001
- Stock No: WPIEA2021201
- ISBN: 9781513588858
- ISSN: 1018-5941
Central findings
- Central banks' extensive monetary loosening in response to the COVID-19 shock has raised concerns about impacts on inequality.
- The relationship between rising inequality and monetary policy is complex and inequality has multiple causes.
- The paper highlights the channels through which monetary policy easing affects income and wealth distribution and presents quantitative findings about their importance.
- Key takeaways:
- (i) central banks should remain focused on macro stability while continuing to improve public communications about distributional effects of monetary policy, and
- (ii) supportive fiscal policies and structural reforms can improve macroeconomic and distributional outcomes.
Topics and channels examined
- Subject areas: Consumption, Income, Income distribution, Income inequality, Labor, National accounts, Wages
- Keywords: A. central bank mandate, A. savings-redistribution channel, asset price channel, Caribbean, Consumption, easing affect income, Global, Income, Income distribution, Income inequality, Wages, wealth channel
Policy implications and recommendations
- Central banks: maintain focus on macro stability.
- Communication: improve public communications about distributional effects of monetary policy.
- Fiscal and structural policy: deploy supportive fiscal policies and structural reforms to improve both macroeconomic and distributional outcomes.
IMF Working Paper — "Distributional Effects of Monetary Policy", July 30, 2021
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