Monetary Policy Transmission to Consumption: Inequalities by Gender and Race

This paper estimates the causal effects of monetary policy shocks on household consumption, with additional analysis of labor market and income responses, disaggregated by gender and race. I find that contractionary monetary policy reduces consumption more for black than white households, with the largest declines among households headed by black women. These gaps persist after accounting for differences in household education, debt, and income, but are partly explained by differences in marital status and spousal insurance against shocks. These shocks also lead households to shift expenditures from non-essential and durable goods toward essential non-durable goods and services. The analysis provides estimates of marginal propensities to consume across groups and shows that contractionary, rather than expansionary, shocks drive aggregate consumption responses. These findings highlight the importance of accounting for intersectional demographic heterogeneity in evaluating the distributional effects of monetary policy.