Capital and Income Inequality: An Aggregate-Demand Complementarity

Florin Bilbiie, Känzig, Diego and Paolo Surico
Authors registered in the RePEc Author Service: Diego Raoul Känzig

No 14118, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: A novel complementarity between capital and income inequality leads to a significant amplification of the effects of monetary policy on consumption. We characterize this finding analytically and quantitatively, using a model with heterogeneity in household saving and income, nominal rigidities, and capital. A fiscal policy that redistributes capital income causes further amplification, whereas redistributing profits generates dampening.

Keywords: Monetary policy; Capital; Income inequality; Complementarity; Multiplier; Heterogeneity; Aggregate demand (search for similar items in EconPapers)
JEL-codes: E21 E22 E32 E44 E52 (search for similar items in EconPapers)
Date: 2019-11
New Economics Papers: this item is included in nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Journal Article: Capital and income inequality: An aggregate-demand complementarity (2022)
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