Real-time inequalities and policies during the pandemic in the US

Luisa Corrado, Daniela Fantozzi () and Simona Giglioli ()
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Daniela Fantozzi: Italian National Institute of Statistics
Simona Giglioli: Bank of Italy

No 1396, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: We investigate the effects of different policies implemented during the pandemic on real-time spatial inequalities in the US. We use a novel database built using anonymized data from the private sector, which enables us to compute daily measures of spending inequality at county level. Using a narrative approach combined with high-frequency data to identify the shocks, we evaluate the impact of monetary policy in a VAR framework. The main findings show that consumption spending inequality rose during the pandemic and that the Fed's policies did not mitigate this increase. Indeed, although these measures had a positive effect on spending for both richer and poorer counties, consumption was stimulated more for the former than for the latter ones. We distinguish two kinds of interventions: those regarding the federal funds rate, Repo agreements and QE programmes ('purely monetary') and those concerning subsidized lending facilities to support credit and avoid mass layoffs ('quasi-fiscal'). Our evidence suggests a greater contribution in the short run by the latter type to stimulating the consumption spending of higher-income counties.

Keywords: monetary policy; inequality; high-frequency data; Covid-19 (search for similar items in EconPapers)
JEL-codes: D31 E21 E52 E58 (search for similar items in EconPapers)
Date: 2022-12
New Economics Papers: this item is included in nep-cba and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_1396_22

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