Monetary Policy and Income Distribution

Jorge Marshall

Journal Economía Chilena (The Chilean Economy), 1999, vol. 2, issue 1, 005-022

Abstract: The link hetween monetary policy and equity is reflected directly by ihe effect of inflation on people’s income and indirectly by economic activity. This article concludes that there is no significant direct relation hetween inflation and income distribution. However the level of output does significantly effect equity and the extent of poverty. In fact, price stability contributes positively to growth and hence to equity in the long run. Thus, the main contribution of monetary policy to equity is by attaining price stability. Nonetheless, some short-term policy decisión may have temporary effects on income distrihution.

Date: 1999
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