Income inequality and monetary policy in the Euro Area

Jerome Creel and Mehdi El Herradi ()

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Abstract: This paper examines the distributional implications of monetary policy, either standard, non-standard or both, on income inequality in 10 Euro Area countries over the period 2000-2015. We use three different indicators of income inequality in a Panel VAR setting in order to estimate IRFs of inequality to a monetary policy shock. The identification of monetary shocks follows a one-step procedure and relies only on country-specific determinants of income distribution. Results suggest that: (i) the distributional effects of ECB's monetary policy have been modest and (ii) mainly driven in times of conventional monetary policy measures, especially in countries with a high level of market inequalities, while, overall, (iii) standard and non-standard monetary policies do not significantly differ in terms of impact on income inequality. Results are robust to alternative data sources either for income distribution or for non-standard monetary policies.

Keywords: Euro Area; Monetary policy; Income distribution; Panel VAR (search for similar items in EconPapers)
Date: 2020-06-01
Note: View the original document on HAL open archive server: https://hal-sciencespo.archives-ouvertes.fr/hal-03389183
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Related works:
Journal Article: Income inequality and monetary policy in the euro area (2024)
Working Paper: Income inequality and monetary policy in the euro area (2024)
Working Paper: Income inequality and monetary policy in the euro area (2024)
Working Paper: Income inequality and monetary policy in the Euro Area (2020)
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