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Income inequality and monetary policy in the Euro Area

Jerome Creel and Mehdi El Herradi ()

No 20/2020, Sciences Po publications from Sciences Po

Abstract: This paper examines the distributional implications of monetary policy, either standard, non-standard or both, on income inequality in 10 Euro Area countries over the period 2000-2015. We use three different indicators of income inequality in a Panel VAR setting in order to estimate IRFs of inequality to a monetary policy shock. The identification of monetary shocks follows a one-step procedure and relies only on country-specific determinants of income distribution. Results suggest that: (i) the distributional effects of ECB’s monetary policy have been modest and (ii) mainly driven in times of conventional monetary policy measures, especially in countries with a high level of market inequalities, while, overall, (iii) standard and non-standard monetary policies do not significantly differ in terms of impact on income inequality. Results are robust to alternative data sources either for income distribution or for non-standard monetary policies.

Keywords: Euro Area; Monetary policy; Income distribution; Panel VAR (search for similar items in EconPapers)
JEL-codes: D63 E62 E64 (search for similar items in EconPapers)
Date: 2020-06
New Economics Papers: this item is included in nep-cba, nep-eec, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Income inequality and monetary policy in the euro area (2024) Downloads
Working Paper: Income inequality and monetary policy in the Euro Area (2020) Downloads
Working Paper: Income inequality and monetary policy in the Euro Area (2020) Downloads
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