Price stickiness along the income distribution and the effects of monetary policy

Javier Cravino, Ting Lan and Andrei Levchenko

Journal of Monetary Economics, 2020, vol. 110, issue C, 19-32

Abstract: Monetary shocks have distributional consequences if they affect relative prices across goods consumed by different households. We document that the prices of the goods consumed by high-income households are stickier and less volatile than those of the goods consumed by middle-income households. Following a monetary policy shock, the estimated impulse responses of high-income households’ consumer price indices are about one-third smaller than those of the middle-income households. We evaluate the implications of these findings in a quantitative multi-sector New–Keynesian model featuring heterogeneous households. The distributional consequences of monetary policy shocks are large and similar to those in the econometric model.

Keywords: Inflation; Distributional effects; Consumption baskets; Monetary policy (search for similar items in EconPapers)
JEL-codes: E31 E52 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (22)

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Related works:
Working Paper: Price stickiness along the income distribution and the effects of monetary policy (2018)
Working Paper: Price Stickiness along the Income Distribution and the Effects of Monetary Policy (2018)
Working Paper: Price Stickiness along the Income Distribution and the Effects of Monetary Policy (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:110:y:2020:i:c:p:19-32

DOI: 10.1016/j.jmoneco.2018.12.001

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