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Innocent Bystanders? Monetary Policy and Inequality in the U.S

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  • Olivier Coibion
  • Yuriy Gorodnichenko
  • Lorenz Kueng
  • John Silvia

Abstract

We study the effects and historical contribution of monetary policy shocks to consumption and income inequality in the United States since 1980. Contractionary monetary policy actions systematically increase inequality in labor earnings, total income, consumption and total expenditures. Furthermore, monetary shocks can account for a significant component of the historical cyclical variation in income and consumption inequality. Using detailed micro-level data on income and consumption, we document the different channels via which monetary policy shocks affect inequality, as well as how these channels depend on the nature of the change in monetary policy.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18170.

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Date of creation: Jun 2012
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Handle: RePEc:nbr:nberwo:18170

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References

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  1. Mark A. Aguiar & Mark Bils, 2011. "Has Consumption Inequality Mirrored Income Inequality?," NBER Working Papers 16807, National Bureau of Economic Research, Inc.
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As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Comment la politique monétaire non conventionnelle affecte-t-elle les inégalités ?
    by ? in D'un champ l'autre on 2014-05-11 22:40:00
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Cited by:
  1. Silvana Tenreyro & Gregory Thwaites, 2013. "Pushing on a string: US monetary policy is less powerful in recessions," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 51559, London School of Economics and Political Science, LSE Library.
  2. Jae Won Lee, 2014. "Monetary Policy with Heterogeneous Households and Imperfect Risk-Sharing," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(3), pages 505-522, July.
  3. Michael Ehrmann & Michael Ziegelmeyer, 2014. "Household Risk Management and Actual Mortgage Choice in the Euro Area," Working Papers, Bank of Canada 14-1, Bank of Canada.
  4. Reis, Ricardo, 2013. "Central Bank Design," CEPR Discussion Papers, C.E.P.R. Discussion Papers 9567, C.E.P.R. Discussion Papers.
  5. Villarreal, Francisco G., 2014. "Financial Services and Household Inequality in Mexico," MPRA Paper 57075, University Library of Munich, Germany.
  6. Vincent Sterk & Silvana Tenreyro, 2013. "The Transmission of Monetary Policy Operations through Redistributions and Durable Purchases," Discussion Papers, Centre for Macroeconomics (CFM) 1305, Centre for Macroeconomics (CFM).
  7. Prasad, Eswar, 2013. "Distributional Effects of Macroeconomic Policy Choices in Emerging Market Economies," IZA Discussion Papers 7777, Institute for the Study of Labor (IZA).
  8. Łukasz Rawdanowicz & Eckhard Wurzel & Ane Kathrine Christensen, 2013. "The Equity Implications of Fiscal Consolidation," OECD Economics Department Working Papers, OECD Publishing 1013, OECD Publishing.
  9. Markus K. Brunnermeier & Yuliy Sannikov, 2012. "Redistributive monetary policy," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, Federal Reserve Bank of Kansas City, pages 331-384.

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