Central banking and inequalities

Clément Fontan, François Claveau and Peter Dietsch
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Clément Fontan: Centre de recherche en éthique, Canada
François Claveau: Centre de recherche en éthique, Canada
Peter Dietsch: Université de Montréal & Centre de recherche en éthique, Canada

Politics, Philosophy & Economics, 2016, vol. 15, issue 4, 319-357

Abstract: What is the relation between monetary policy and inequalities in income and wealth? This question has received insufficient attention, especially in light of the unconventional policies introduced since the 2008 financial crisis. The article analyzes three ways in which the concern central banks show for inequalities in their official statements remains incomplete and underdeveloped. First, central banks tend to care about inequality for instrumental reasons only. When they do assign intrinsic value to containing inequalities, they shy away from trade-offs with the standard objectives of monetary policy that such a position entails. Second, central banks play down the causal impact monetary policy has on inequalities. When they do acknowledge it, they defend their actions by claiming that it is an unintended side effect, that it is temporary, and/or that any alternative policy would fare even worse. The article appeals to the doctrine of double effect to criticize these arguments. Third, even if one accepts that inequalities should be contained and that today’s monetary policies exacerbate them, is it both desirable and feasible to make containing inequalities part of the mandate of central banks? The article analyzes and rejects three attempts on the part of central banks to answer this question negatively.

Keywords: inequality; monetary policy; central banks; central banking after the crisis; doctrine of double effect (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pophec:v:15:y:2016:i:4:p:319-357

DOI: 10.1177/1470594X16651056

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