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Does monetary policy affect income inequality in the euro area?

Anna Samarina () and Anh Nguyen

DNB Working Papers from Netherlands Central Bank, Research Department

Abstract: This paper examines how monetary policy affects income inequality in 10 euro area countries over the period 1999-2014. We distinguish macroeconomic and financial channels through which monetary policy may have distributional effects. The macroeconomic channel is captured by wages and employment, while the financial channel by asset prices and returns. We find that expansionary monetary policy in the euro area reduces income inequality, especially in the periphery countries. The macroeconomic channel leads to these equalizing effects: monetary easing reduces income inequality by raising wages and employment. However, there is some indication that the financial channel may weaken the equalizing effect of expansionary monetary policy.

Keywords: income inequality: monetary policy; euro area (search for similar items in EconPapers)
JEL-codes: D63 E50 E52 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-eec, nep-mac and nep-mon
Date: 2019-03
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Persistent link: https://EconPapers.repec.org/RePEc:dnb:dnbwpp:626

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