Intergenerational redistributive effects of monetary policy

Marcin Bielecki, Michal Brzoza-Brzezina and Marcin Kolasa

No 2021-064, KAE Working Papers from Warsaw School of Economics, Collegium of Economic Analysis

Abstract: This paper investigates the distributional consequences of monetary policy across generations. We use a life-cycle model with a rich asset structure as well as nominal and real rigidities calibrated to the euro area using both macroeconomic aggregates and microeconomic evidence from the Household Finance and Consumption Survey. We show that the life-cycle profi les of income and asset accumulation decisions are important determinants of redistributive effects of monetary shocks and ignoring them can lead to highly misleading conclusions. The redistribution is mainly driven by nominal assets and labor income, less by real and housing assets. Overall, we find that a typical monetary policy easing redistributes welfare from older to younger generations.

Keywords: monetary policy; life-cycle models; wealth redistribution (search for similar items in EconPapers)
JEL-codes: E31 E52 J11 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2021-03
New Economics Papers: this item is included in nep-age, nep-ban, nep-cba, nep-dge, nep-eec, nep-isf, nep-mac and nep-mon
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Citations: View citations in EconPapers (4)

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http://hdl.handle.net/20.500.12182/1118 (application/pdf)

Related works:
Journal Article: Intergenerational Redistributive Effects of Monetary Policy (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:sgh:kaewps:2021064

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