Does the ECB’s Monetary Policy Affect Personal Finances and Economic Inequality? A Household Perspective from Germany

Bernd Hayo

MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: Despite a growing academic literature on the distributional effects of monetary policy (MP), little is known about how laypersons perceive the effects of MP on their own economic situation and national economic inequality. This study examines laypersons' perceptions in Germany of the impact of the ECB's MP on (i) their personal economic situation and (ii) national economic inequality, using representative survey data collected in 2018. I review the existing academic literature, which identifies various characteristics of individuals that could potentially render them susceptible to the effects of monetary policy, such as savings, wealth, home ownership, debt, unemployment, or age. I then investigate whether these characteristics align with layperson’s perceptions. Ordered logit analysis shows that, contrary to the economic literature, most variables - with the exception of 'savers' - appear to be irrelevant to laypersons' perceptions. Instead, factors such as objective knowledge of monetary policy, trust in the ECB, party affiliation and residence in East Germany emerge as significant factors.

Keywords: Economic inequality; income distribution; monetary policy; ECB; population survey; Germany (search for similar items in EconPapers)
JEL-codes: D31 E58 E71 Z1 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2023
New Economics Papers: this item is included in nep-mac and nep-mon
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