Monetary Policy and Racial Inequality

Bartscher, Alina K.; Kuhn, Moritz; Schularick, Moritz; Wachtel, Paul

Monetary Policy and Racial Inequality

Alina K. Bartscher, Moritz Kuhn, Moritz Schularick and Paul Wachtel

No 14, ECONtribute Policy Brief Series from University of Bonn and University of Cologne, Germany

Abstract: Racial income and wealth gaps in the United States are large and persistent. Recently, central bankers and politicians have put forward the suggestion that monetary policy can be used to reduce these inequalities. We investigate the distributional effects of monetary policy in a unified framework, linking monetary policy shocks both to earnings and wealth differentials between black and white households. Over multi-year horizons, we find that while accommodative monetary policy tends to reduce racial unemployment and thus earnings differentials, it exacerbates racial wealth differentials, which implies an important tradeoff for policymakers.

Pages: 9 pages
Date: 2021-02
New Economics Papers: this item is included in nep-mon and nep-pke
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Citations: View citations in EconPapers (11)

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https://www.econtribute.de/RePEc/ajk/ajkpbs/ECONtribute_PB_014_2021.pdf First version, 2021 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:ajk:ajkpbs:014

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