Five Facts about the Distributional Income Effects of Monetary Policy Shocks

Niklas Amberg, Thomas Jansson, Mathias Klein and Anna Rogantini Picco

American Economic Review: Insights, 2022, vol. 4, issue 3, 289-304

Abstract: We document five facts about the distributional income effects of monetary policy shocks using Swedish administrative individual-level data. (i) The effects of monetary policy shocks are U shaped over the income distribution—that is, expansionary shocks increase the incomes of high- and low-income individuals relative to middle-income individuals. (ii) The large effects in the bottom are accounted for by the labor-income response and (iii) those in the top by the capital-income response. (iv) The heterogeneity in the labor-income response is due to the earnings heterogeneity channel, whereas (v) that in the capital-income response is due to the income composition channel.

JEL-codes: D31 E32 E52 J31 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1257/aeri.20210262

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