Work

On the Effects of Monetary Policy Shocks on Income and Consumption Heterogeneity

Year: 2024

Type: report

Abstract: In this paper we use the functional vector autoregression (VAR) framework of Chang, Chen, and Schorfheide (2024) to study the effects of monetary policy shocks (conventional and informational) on the cross-sectional distribution of U.S. earnings (from the Current Population Survey), consumption, and financial income (both from the Consumer Expenditure Survey).We find that a conventional expansionary monetary policy shock reduces earnings inequality, in large part by lifting individuals out of unemployment.There is a weakly positive effect on consumption inequality and no effect on financial income inequality, but credible bands are wide.

Source: National Bureau of Economic Research

DOI: 10.3386/w32166

Authors: Minsu Chang, Frank Schorfheide

Institutions: National Bureau of Economic Research, Georgetown University, University of Pennsylvania, Centre for Economic Policy Research

Language: English

Topic: Monetary Policy and Economic Impact

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Reduced inequalities, Decent work and economic growth, No poverty

Open Access status: green

OpenAlex ID: W4392837053

Cites: 40

Cited by: 11

Related to: 10