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Monetary policy and inequality

Maarten Dossche (), Jiri Slacalek () and Guido Wolswijk ()

Economic Bulletin Articles, 2021, vol. 2

Abstract: This article reviews recent evidence on the interaction between monetary policy and household inequality. While economic inequality has been trending upwards in most advanced economies since the early 1980s, this analysis concludes that monetary policy has not been a major driver of those long-term trends. On the contrary, the accommodative monetary policies of recent years have had an equalising effect, particularly through employment gains for lower income households. Moreover, there is now more evidence showing that the distribution of income and wealth plays a key role in the transmission of monetary policy to household spending. However, while improvements to models and data have contributed to a better understanding of the ways in which household heterogeneity shapes the transmission of monetary policy, several unsolved puzzles remain, necessitating further research efforts. JEL Classification: D3, E21, E52

Keywords: Inequality; monetary policy (search for similar items in EconPapers)
Date: 2021-03
Note: 3577821
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