Monetary Policy and the Evolution of Wealth Disparity: An Assessment Using US Survey of Consumer Finance Data

Damien Nicholas Parker () and Willi Semmler ()
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Damien Nicholas Parker: The New School for Social Research
Willi Semmler: The New School for Social Research

Computational Economics, 2024, vol. 64, issue 6, No 14, 3509-3541

Abstract: Abstract In the context of the studies of income and wealth distribution, this paper explores evidence to what extent recent monetary policy had distribution effects. This research utilizes the Federal Reserve Board’s Survey of Consumer Finances to identify at least two sub populations and follow their dynamics as monetary policy moved from conventional interest rate setting to unconventional Quantitative Easting policy. This is achieved through use of Weighted Expectation Maximization Cluster Modeling, and the Malhalanobis Distance between cluster means. This approach is used to study volatility and bifurcation in distributions of capital gains and incomes to U.S. households through the Financial Crisis and Sars-CoV-2 pandemic.

Keywords: Wealth disparity; Quantitative easing; Weighted expectation maximization; Cluster modeling; Malhalanobis distance; Unsupervised learning (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s10614-024-10560-1

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