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Unconventional Monetary Policy Shocks and their Distributional Implications

Author

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  • Bügel, David
  • Hidalgo, Albert
  • Luetticke, Ralph

Abstract

We identify a novel series of unconventional monetary policy shocks for the U.S. by combining Romer and Romer’s narrative identification strategy with Wu and Xia’s shadow federal funds rate. This yields a unified metric of monetary shocks during the zero-lower bound period. We find that unconventional monetary policy is effective in stimulating the economy, but comes at the cost of higher wealth inequality. In particular, stock prices rise more than house prices, benefiting wealthier households over the middle class.

Suggested Citation

  • Bügel, David & Hidalgo, Albert & Luetticke, Ralph, 2024. "Unconventional Monetary Policy Shocks and their Distributional Implications," CEPR Discussion Papers 19163, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:19163
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    More about this item

    Keywords

    Monetary policy and shocks; Wealth inequality; Household portfolios;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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