EconPapers    
Economics at your fingertips  
 

Conventional and unconventional monetary policy vs. households income distribution: An empirical analysis for the Euro Area

Chiara Guerello

Journal of International Money and Finance, 2018, vol. 85, issue C, 187-214

Abstract: By recovering measures of income dispersion from the European Commission Consumer Survey, this analysis addresses whether conventional and unconventional monetary policies affect income inequalities in the Euro Area and the impact thereof on monetary transmission. First, in a VAR framework, the effects of both types of monetary policy on income distribution are evaluated. Second, the marginal effect of income dispersion on the consumption elasticity to monetary shocks is investigated using the same framework. The results suggest high cross-country heterogeneity in the impact of monetary policy and non-linearities associated with the redistributive strength of fiscal policy and the maturity of the household portfolio. Standard expansionary monetary measures typically have a small contractionary effect on income distribution. Mildly high-income dispersion is beneficial for the transmission of the monetary shocks to consumption because it overcomes the negative effect of consumption smoothing. However, for what concerns Q.E. measures, poorly redistributive fiscal policy and highly sensitive households’ portfolio might trigger these results.

Keywords: Income dispersion; Monetary policy; Quantitative easing; Marginal propensity to consume; Redistributive fiscal policy (search for similar items in EconPapers)
JEL-codes: D31 E21 E52 E58 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0261560617302280
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:85:y:2018:i:c:p:187-214

Access Statistics for this article

Journal of International Money and Finance is currently edited by J. R. Lothian

More articles in Journal of International Money and Finance from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2018-06-02
Handle: RePEc:eee:jimfin:v:85:y:2018:i:c:p:187-214