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Effects of monetary policy on the wealth inequality

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  • Do, Yeongwoong

Abstract

This paper examines the effect of monetary policy on wealth inequality in the United States using quarterly data from the Distributional Financial Accounts. I construct a Gini coefficient across five wealth groups and analyze its response to high-frequency-identified monetary shocks. Results suggest contractionary policy modestly reduces wealth inequality via lower equity values, but this effect is statistically insignificant and offset by reallocation toward interest-bearing assets. Real assets, such as housing, play a limited role in shaping these distributional dynamics.

Suggested Citation

  • Do, Yeongwoong, 2025. "Effects of monetary policy on the wealth inequality," Economics Letters, Elsevier, vol. 255(C).
    • Handle: RePEc:eee:ecolet:v:255:y:2025:i:c:s0165176525004100
    DOI: 10.1016/j.econlet.2025.112573
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    References listed on IDEAS

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    More about this item

    Keywords

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    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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