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The distributive impact of unconventional monetary policies – old and new

Author

Listed:
  • Gobbi, Lucio
  • D'Ippoliti, Carlo
  • Temperini, Jacopo

Abstract

In this paper we analyze the impact of less conventional monetary policy tools on the personal and functional distribution of income. We focus on the issuance of central bank digital currency (CBDC) in a comparative perspective, using a stock-flow consistent model of the eurozone economy. We consider two kinds of policies: helicopter money policies such as Quantitative Easing and the issuance of a CBDC; and scenarios not based on balance sheet expansions, such as an interest rate policy following the Pasinetti Rule, or a sterilized issuance of CBDC. Monetary policies using CBDCs tend to increase the wage share at the expense of financial rents. The targeted issuance of CBDCs to firms might produce an increase in GDP, corporate profits, and the wage share. The Pasinetti Rule reduces personal income inequality the most, but if applied mechanically, its impact on growth is also the least desirable.

Suggested Citation

  • Gobbi, Lucio & D'Ippoliti, Carlo & Temperini, Jacopo, 2024. "The distributive impact of unconventional monetary policies – old and new," MPRA Paper 122934, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:122934
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    File URL: https://mpra.ub.uni-muenchen.de/122934/1/MPRA_paper_122934.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Inequality; Monetary policy; Central Bank Digital Currencies; Pasinetti Rule;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • G0 - Financial Economics - - General
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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