The effects of monetary policy on income and wealth inequality in the U.S. Exploring different channels

Juan-Francisco Albert, Antonio Peñalver and Alberto Perez-Bernabeu

Structural Change and Economic Dynamics, 2020, vol. 55, issue C, 88-106

Abstract: We assess the effects of monetary policy shocks on income and wealth inequality through direct inequality measures and by analyzing several transmission channels explored in recent literature. Furthermore, we analyze two additional channels: the Housing and the Fiscal channels. The methodology adopted is a Bayesian proxy SVAR using a high-frequency identification based on the external instruments approach. Our own policy shocks are constructed for this purpose. The results show that an expansionary monetary policy shock does not have a significant effect on income inequality due to the existence of opposite channels, whereas it increases wealth inequality mainly through the portfolio channel.

Keywords: Monetary policy; Income and wealth inequality; BVAR; Proxy SVAR; High-frequency identification (search for similar items in EconPapers)
JEL-codes: D63 E52 E58 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:55:y:2020:i:c:p:88-106

DOI: 10.1016/j.strueco.2020.07.002

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