Monetary Policy and Household Inequality

Markups, inequality and monetary‐fiscal policies

“…An interest rate cut reduces savers’ interest income; however, savers’ profit income increases due to the general equilibrium responses of prices and wages. This is in line with Kaplan et al (2018) and Ampudia et al (2018) in that indirect effects (general equilibrium effect) of an interest rate cut are more dominant than its direct effect (intertemporal substitution effect).…”

“…Empirical studies present mixed findings regarding the impact of monetary policy on income, wealth, and consumption inequality since the distributional channels of monetary policy are not easily clear cut. Ampudia et al (2018) and Cloyne et al (2020) find that expansionary monetary policies have a neutral impact on income inequality because easing monetary policy generates higher income and employment for all the agents. Coibion et al (2017) and Mumtaz and Theophilopoulou (2017) show that contractionary monetary policy raises inequality in labor earnings, total income, consumption, and total expenditures.…”

Advancing the Monetary Policy Toolkit through Outright Transfers

“…Accordingly, Andersen et al (2020) find a large impact on wealth inequality in a case study for Denmark based on household microdata, whereas other studies (cf. Kappes (2021), Bonifacio et al (2021), Ampudia et al (2018)) find mixed results, particularly for income inequality. The mixed evidence attests to the very heterogeneous effects of QE on households across the income and wealth distribution, depending on individual households' assets and liability structure, generally benefiting borrowers over creditors and owners of real estate over renters for example.…”

The impact of monetary policy on income inequality: evidence from Eurozone markets

“…6. Other income inequality measures employed in the literature are the Gini Index (Saiki and Frost, 2014; Guerello, 2018, Furceri et al , 2018; Lenza and Slacalek, 2018; Ampudia et al , 2018, Samarina and Nguyen, 2019) and the Palma Measure (Cobham and Sumner, 2013). Note that Atkinson (1970) argued that conventional methods to measure inequality may be misleading and argued that the conceptual problems regarding inequality measurement have been overlooked in the literature.…”

“…Mumtaz and Theophilopoulou (2017) find results consistent with the view that contractionary policies tend to increase income inequality in the UK, while Furceri et al (2018) examine 32 countries and find that, on average, contractionary monetary policy shocks tend to increase income inequality while expansionary policy actions tend to reduce it. In studies of European countries, Lenza and Slacalek (2018) find that QE squeezes the income distribution, Ampudia et al (2018) find that expansionary monetary policy reduces income inequality, Samarina and Nguyen (2019) find that expansionary monetary shocks cause the reduction of income inequality, with their results being more significant for peripheral countries.…”