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Does Unconventional Monetary Policy Affect Inequality? Evidence from Japan

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  • Ayako Saiki

    (De Nederlandsche Bank)

  • Jon Frost

    (De Nederlandsche Bank)

Abstract

Inequality has been largely ignored in the literature and practice of monetary policy, but is gaining more attention recently. Here, we exclusively focus on the impact of unconventional monetary policy (UMP) on inequality. We look at how the recent UMP in Japan affected inequality, using household survey data. Our vector auto regression results show that UMP widened income inequality after Q4 2008 as the Bank of Japan (BoJ) resumed its zero-interest rate policy and reinstated UMP. This is largely due to the portfolio channel. To the best of our knowledge, this is the first study to empirically analyze the distributional impact of UMP. Japan’s extensive experience with UMP may hold important policy implications for other countries.

Suggested Citation

  • Ayako Saiki & Jon Frost, 2014. "Does Unconventional Monetary Policy Affect Inequality? Evidence from Japan," Working Papers 1402, Council on Economic Policies.
  • Handle: RePEc:ceq:wpaper:1402
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    References listed on IDEAS

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    Cited by:

    1. Davide Furceri & Prakash Loungani & Aleksandra Zdzienicka, 2016. "The Effects of Monetary Policy Shocks on Inequality," IMF Working Papers 16/245, International Monetary Fund.
    2. Christophe Blot & Jérôme Creel & Paul Hubert & Fabien Labondance & Xavier Ragot, 2015. "The redistributive effects of QE," Sciences Po publications info:hdl:2441/16fo245k6a8, Sciences Po.
    3. Casiraghi, Marco & Gaiotti, Eugenio & Rodano, Lisa & Secchi, Alessandro, 2018. "A “reverse Robin Hood”? The distributional implications of non-standard monetary policy for Italian households," Journal of International Money and Finance, Elsevier, vol. 85(C), pages 215-235.
    4. Goodness C. Aye & Matthew W. Clance & Rangan Gupta, 2017. "The Effectiveness of Monetary and Fiscal Policy Shocks on U.S. Inequality: The Role of Uncertainty," Working Papers 201782, University of Pretoria, Department of Economics.
    5. Masayuki Inui & Nao Sudo & Tomoaki Yamada, 2017. "Effects of Monetary Policy Shocks on Inequality in Japan," Bank of Japan Working Paper Series 17-E-3, Bank of Japan.
    6. Ayako Saiki & Jon Frost, 2018. "Japan's Unconventional Monetary Policy and Income Distribution: Revisited," Working Papers e126, Tokyo Center for Economic Research.
    7. Lucas Hafemann & Paul Rudel & Joerg Schmidt, 2017. "Moving Closer or Drifting Apart: Distributional Effects of Monetary Policy," MAGKS Papers on Economics 201721, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    8. repec:prg:jnlpep:v:2017:y:2017:i:6:id:630:p:633-645 is not listed on IDEAS
    9. Pierre Monnin, 2017. "Monetary Policy, Macroprudential Regulation and Inequality," Discussion Notes 1702, Council on Economic Policies.
    10. Bunn, Philip & Pugh, Alice & Yeates, Chris, 2018. "The distributional impact of monetary policy easing in the UK between 2008 and 2014," Bank of England working papers 720, Bank of England.
    11. repec:wiw:wus046:6215 is not listed on IDEAS
    12. Martin Feldkircher & Kazuhiko Kakamu, 2018. "How does monetary policy affect income inequality in Japan? Evidence from grouped data," Papers 1803.08868, arXiv.org.
    13. Kazuki Tomioka & Rod Tyers, 2016. "Has Foreign Growth Contributed to Stagnation and Inequality in Japan?," Economics Discussion / Working Papers 16-14, The University of Western Australia, Department of Economics.
    14. Taghizadeh-Hesary, Farhad & Yoshino, Naoyuki & Shimizu, Sayoko, 2018. "The Impact of Monetary and Tax Policy on Income Inequality in Japan," ADBI Working Papers 837, Asian Development Bank Institute.
    15. repec:eee:jimfin:v:85:y:2018:i:c:p:187-214 is not listed on IDEAS
    16. Andrea Colciago & Anna Samarina & Jakob de Haan, 2018. "Central bank policies and income and wealth inequality: A survey," DNB Working Papers 594, Netherlands Central Bank, Research Department.
    17. Boris Cournède & Oliver Denk & Peter Hoeller, 2015. "Finance and Inclusive Growth," OECD Economic Policy Papers 14, OECD Publishing.
    18. Karen Davtyan, 2016. "“The Distributive effects of conventional and unconventional monetary policies”," AQR Working Papers 201606, University of Barcelona, Regional Quantitative Analysis Group, revised Apr 2016.
    19. Filipa Lima & Sonia Mota, 2017. "Unconventional monetary policy - is there a call for unconventional statistics?," IFC Bulletins chapters,in: Bank for International Settlements (ed.), Statistical implications of the new financial landscape, volume 43 Bank for International Settlements.
    20. repec:eee:jimfin:v:85:y:2018:i:c:p:168-186 is not listed on IDEAS
    21. Karen Davtyan, 2016. "“Income Inequality and Monetary Policy: An analysis on the Long Run Relation”," IREA Working Papers 201604, University of Barcelona, Research Institute of Applied Economics, revised Apr 2016.
    22. Masayuki Inui & Nao Sudo & Tomoaki Yamada, 2017. "The effects of monetary policy shocks on inequality in Japan," BIS Working Papers 642, Bank for International Settlements.
    23. repec:eee:ecolec:v:149:y:2018:i:c:p:239-253 is not listed on IDEAS

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