On the Effects of Monetary Policy Shocks on Income and Consumption Heterogeneity

Minsu Chang () and Frank Schorfheide ()
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Minsu Chang: Georgetown University
Frank Schorfheide: University of Pennsylvania

PIER Working Paper Archive from Penn Institute for Economic Research, Department of Economics, University of Pennsylvania

Abstract: In this paper we use the functional vector autoregression (VAR) framework of Chang, Chen, and Schorfheide (2024) to study the eeffects of monetary policy shocks (conventional and informational) on the cross-sectional distribution of U.S. earnings (from the Current Population Survey), consumption, and financial income (both from the Consumer Expenditure Survey). We find that a conventional expansionary monetary policy shock reduces earnings inequality, in large part by lifting individuals out of unemployment. There is a weakly positive effect on consumption inequality and no effect on financial income inequality, but credible bands are wide.

Keywords: Consumption Distribution; Earnings Distribution; Financial Income Distribution; Functional Vector Autoregressions; Monetary Policy Shocks (search for similar items in EconPapers)
JEL-codes: C11 C32 C52 E32 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2024
New Economics Papers: this item is included in nep-cba and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: On the Effects of Monetary Policy Shocks on Income and Consumption Heterogeneity (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:pen:papers:24-003

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