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

55 Pages Posted: 22 Jun 2012 Last revised: 11 Jul 2012

See all articles by Olivier Coibion

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

University of Lugano - Faculty of Economics; Swiss Finance Institute; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); Northwestern University - Kellogg School of Management

John Silvia

affiliation not provided to SSRN

Multiple version iconThere are 4 versions of this paper

Date Written: June 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.

Suggested Citation

Coibion, Olivier and Gorodnichenko, Yuriy and Kueng, Lorenz and Silvia, John, Innocent Bystanders? Monetary Policy and Inequality in the U.S (June 2012). NBER Working Paper No. w18170. Available at SSRN: https://ssrn.com/abstract=2089243

Olivier Coibion (Contact Author)

University of Texas at Austin ( email )

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Yuriy Gorodnichenko

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

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Lorenz Kueng

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Swiss Finance Institute

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John Silvia

affiliation not provided to SSRN ( email )

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