Effects of monetary policy on the wealth inequality

Yeongwoong Do

Economics Letters, 2025, vol. 255, issue C

Abstract: This paper examines the effect of monetary policy on wealth inequality in the United States using quarterly data from the Distributional Financial Accounts. I construct a Gini coefficient across five wealth groups and analyze its response to high-frequency-identified monetary shocks. Results suggest contractionary policy modestly reduces wealth inequality via lower equity values, but this effect is statistically insignificant and offset by reallocation toward interest-bearing assets. Real assets, such as housing, play a limited role in shaping these distributional dynamics.

Keywords: Wealth inequality; Monetary policy; Asset portfolio (search for similar items in EconPapers)
JEL-codes: D63 E44 E52 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:255:y:2025:i:c:s0165176525004100

DOI: 10.1016/j.econlet.2025.112573

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