Monetary Policy and Inequality

Asger Lau Andersen, Niels Johannesen, Mia Jørgensen and Jose-Luis Peydro
Additional contact information
Asger Lau Andersen: University of Copenhagen, CEBI and DFI
Mia Jørgensen: University of Copenhagen and CEBI

No 22-09, CEBI working paper series from University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI)

Abstract: We analyze the distributional effects of monetary policy on income, wealth and consumption. We use administrative household-level data covering the entire population in Denmark over the period 1987-2014 and exploit a long-standing currency peg as a source of exogenous variation in monetary policy. We consistently find that gains from softer monetary policy in terms of income, wealth and consumption are monotonically increasing in the ex-ante income level. The distributional effects reflect systematic differences in exposure to the various channels of monetary policy, especially non-labor channels (e.g. leverage and risky assets). Our estimates imply that softer monetary policy increases income inequality.

Keywords: Monetary policy; Inequality; Household heterogeneity; Risky assets; Leverage (search for similar items in EconPapers)
JEL-codes: E2 E4 E5 G1 G2 G5 (search for similar items in EconPapers)
Pages: 83
Date: 2022-08-22
New Economics Papers: this item is included in nep-eec and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Working Paper: Monetary Policy and Inequality (2021)
Working Paper: Monetary Policy and Inequality (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:kud:kucebi:2209

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