The effect of monetary policy on inflation heterogeneity along the income distribution

Miguel Ampudia, Michael Ehrmann and Georg Strasser

No 18460, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper studies the effect of monetary policy on inflation along the income distribution in several euro area countries. It shows that monetary policy has differential effects and identifies two channels which point in opposite directions. On the one hand, different consumption shares imply that the inflation experienced by high-income households responds less to monetary policy. On the other hand, the paper provides novel evidence that there are substantial differences in shopping behaviour and its reaction to monetary policy, which imply that the inflation experienced by high-income households responds more to monetary policy.

JEL-codes: D30 E31 E52 (search for similar items in EconPapers)
Date: 2023-09
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Working Paper: The effect of monetary policy on inflation heterogeneity along the income distribution (2023)
Working Paper: The effect of monetary policy on inflation heterogeneity along the income distribution (2023)
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