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Innocent Bystanders? Monetary Policy and Inequality in the U.S.

61 Pages Posted: 5 Jun 2012  

Olivier Coibion

University of Texas at Austin

Yuriy Gorodnichenko

University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Lorenz Kueng

Northwestern University - Kellogg School of Management; National Bureau of Economic Research (NBER)

John Silvia

affiliation not provided to SSRN

Multiple version iconThere are 4 versions of this paper

Date Written: May 30, 2012

Abstract

We study the effects and historical contribution of monetary policy shocks to consumption and income inequality in the United States since 1980. Contractionary monetary policy actions systematically increase inequality in labor earnings, total income, consumption and total expenditures. Furthermore, monetary shocks can account for a significant component of the historical cyclical variation in income and consumption inequality. Using detailed micro-level data on income and consumption, we document the different channels via which monetary policy shocks affect inequality, as well as how these channels depend on the nature of the change in monetary policy.

Keywords: Monetary policy, income inequality, consumption inequality

JEL Classification: E3, E4, E5

Suggested Citation

Coibion, Olivier and Gorodnichenko, Yuriy and Kueng, Lorenz and Silvia, John, Innocent Bystanders? Monetary Policy and Inequality in the U.S. (May 30, 2012). Available at SSRN: https://ssrn.com/abstract=2078425 or http://dx.doi.org/10.2139/ssrn.2078425

Olivier Coibion (Contact Author)

University of Texas at Austin ( email )

Austin, TX 78712
United States

Yuriy Gorodnichenko

University of California, Berkeley - Department of Economics ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States

HOME PAGE: http://www.econ.berkeley.edu/~ygorodni/index.htm

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Lorenz Kueng

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States
+1 (847) 491-7843 (Phone)
+1 (847) 491-5719 (Fax)

HOME PAGE: http://www.lorenzkueng.com

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

John Silvia

affiliation not provided to SSRN ( email )

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