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

Author Info

  • Coibion, Olivier

    ()

    (University of Texas at Austin)

  • Gorodnichenko, Yuriy

    ()

    (University of California, Berkeley)

  • Kueng, Lorenz

    ()

    (Northwestern University)

  • Silvia, John

    (Wells Fargo)

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 Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6633.

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Length: 56 pages
Date of creation: Jun 2012
Date of revision:
Handle: RePEc:iza:izadps:dp6633
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Keywords: monetary policy; income inequality; consumption inequality;

Other versions of this item:

Find related papers by JEL classification:
  • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
  • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
  • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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  1. Clarida, R. & Gali, J. & Gertler, M., 1998. "Monetary Policy Rules and Macroeconomic Stability: Evidence and some Theory," Working Papers 98-01, C.V. Starr Center for Applied Economics, New York University.
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Blog mentions

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  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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