Monetary Policy and Racial Inequality

Alina K. Bartscher (), Moritz Kuhn, Moritz Schularick and Paul Wachtel
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Moritz Schularick: https://www.newyorkfed.org/research/economists/schularick

No 959, Staff Reports from Federal Reserve Bank of New York

Abstract: This paper aims at an improved understanding of the relationship between monetary policy and racial inequality. 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. Specifically, we show that, although a more accommodative monetary policy increases employment of black households more than white households, the overall effects are small. At the same time, an accommodative monetary policy shock exacerbates the wealth difference between black and white households, because black households own fewer financial assets that appreciate in value. Over a five-year horizon, the employment effects remain substantially smaller than the countervailing portfolio effects.

Keywords: monetary policy; racial inequality; income distribution; wealth distribution; wealth effects (search for similar items in EconPapers)
JEL-codes: E40 E52 J15 (search for similar items in EconPapers)
Pages: 47
Date: 2021-01-01
New Economics Papers: this item is included in nep-lab and nep-mac
Note: Revised June 2021.
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Citations: View citations in EconPapers (10)

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Related works:
Working Paper: Monetary Policy and Racial Inequality (2022)
Working Paper: Monetary Policy and Racial Inequality (2022)
Working Paper: Monetary Policy and Racial Inequality (2021)
Working Paper: Monetary Policy and Racial Inequality (2021)
Working Paper: Monetary Policy and Racial Inequality (2021)
Working Paper: Monetary policy and racial inequality (2021)
Working Paper: Monetary Policy and Racial Inequality (2021)
Working Paper: Monetary Policy and Racial Inequality (2021)
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