Monetary Policy and Racial Inequality

Alina Bartscher, Moritz Kuhn (), Moritz Schularick and Paul Wachtel ()
Additional contact information
Alina Bartscher: Danmarks Nationalbank
Moritz Kuhn: Universität Bonn = University of Bonn, CEPR - Center for Economic Policy Research, IZA - Forschungsinstitut zur Zukunft der Arbeit - Institute of Labor Economics
Paul Wachtel: NYU - NYU System

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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 for 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 fiveyear 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)
Date: 2022
New Economics Papers: this item is included in nep-mon
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03881327
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Citations: View citations in EconPapers (3)

Published in Brookings Papers on Economic Activity, In press

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Related works:
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)
Working Paper: Monetary Policy and Racial Inequality (2021)
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