Monetary Policy over the Life Cycle

R. Braun and Daisuke Ikeda

No 2021-20a, FRB Atlanta Working Paper from Federal Reserve Bank of Atlanta

Abstract: A tighter monetary policy is generally associated with higher real interest rates on deposits and loans, weaker performance of equities and real estate, and slower growth in employment and wages. How does a household’s exposure to monetary policy vary with its age? The size and composition of both household income and asset portfolios exhibit large variation over the lifecycle in Japanese data. We formulate an overlapping generations model that reproduces these observations and use it to analyze how household responses to monetary policy shocks vary over the lifecycle. Both the signs and the magnitudes of the responses of a household’s net worth, disposable income and consumption depend on its age.

Keywords: monetary policy; lifecycle; portfolio choice; nominal government debt (search for similar items in EconPapers)
JEL-codes: D15 E52 E62 G51 (search for similar items in EconPapers)
Pages: 73
Date: 2021-08-20
New Economics Papers: this item is included in nep-dge, nep-mac and nep-mon
Note: Revised September 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in 2021

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Related works:
Journal Article: Monetary Policy Over the Lifecycle (2025)
Working Paper: Monetary Policy over the Lifecycle (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedawp:93475

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DOI: 10.29338/wp2021-20a

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