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How does monetary policy affect income inequality in Japan? Evidence from grouped data

Martin Feldkircher and Kazuhiko Kakamu

No 2018/03, Working Papers in Regional Science from WU Vienna University of Economics and Business

Abstract: We examine the effects of monetary policy on income inequality in Japan using a novel econometric approach that jointly estimates the Gini coefficient based on micro-level grouped data of households and the dynamics of macroeconomic quantities. Our results indicate different effects on income inequality for different types of households: A monetary tightening increases inequality when income data is based on households whose head is employed (workers' households), while the effect reverses over the medium term when considering a broader definition of households. Differences in the relative strength of the transmission channels can account for this finding. Finally we demonstrate that the proposed joint estimation strategy leads to more informative inference while results based on the frequently used two-step estimation approach yields inconclusive results.

Keywords: Income inequality; Monetary policy; Grouped data; Bayesian analysis (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-cba and nep-mon
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Citations: View citations in EconPapers (14)

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Journal Article: How does monetary policy affect income inequality in Japan? Evidence from grouped data (2022) Downloads
Working Paper: How does monetary policy affect income inequality in Japan? Evidence from grouped data (2021) Downloads
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