Conference paper

Publication year: 2018

Pages: 110-136

Journal: The Manchester School

Volume number: 86

ISSN: 1463-6786

eISSN: 1467-9957

Open access status: Green

DOI Link: https://doi.org/10.1111/manc.12237

Conference: 49th Annual Conference of the Money-Macroeconomics-and-Finance-Research-Group

Publisher: Wiley

Abstract: 
The heating debate about increasing income inequality forces monetary policy makers and academia to (re-)assess the nexus between (unconventional) monetary policy and inequality. We use a VAR framework to unveil the distributional effects of monetary policy and the role of redistribution in six advanced economies. While all of them experience an increase in Gini coefficients of gross income due to an expansionary monetary policy shock, only countries with relatively little redistribution display a significant response of net income inequality as well. To examine the underlying transmission channels we take a closer look at the sources of income, i.e. labor and capital income. Our findings suggest that the disproportional surge in capital income is the driving force behind the increase in net income inequality.

Harvard Citation style: Hafemann, L., Rudel, P. and Schmidt, J. (2018) Moving Closer or Drifting Apart: Distributional Effects of Monetary Policy, The Manchester School, 86, pp. 110-136. https://doi.org/10.1111/manc.12237

APA Citation style: Hafemann, L., Rudel, P., & Schmidt, J. (2018). Moving Closer or Drifting Apart: Distributional Effects of Monetary Policy. The Manchester School. 86, 110-136. https://doi.org/10.1111/manc.12237