Monetary Policy, Inequality and Political Instability

39 Pages Posted: 11 Jan 2018

See all articles by Pablo Duarte

Pablo Duarte

University of Leipzig - Institute for Empirical Research in Economics (IEW) / Econometrics; affiliation not provided to SSRN

Gunther Schnabl

University of Leipzig - Institute for Economic Policy

Multiple version iconThere are 2 versions of this paper

Date Written: November 16, 2017

Abstract

Based on the concepts of justice by Hayek, Rawls and Buchanan we argue that the growing political dissatisfaction in industrialized countries is rooted in the asymmetric pattern in monetary policies since the 1980s for two reasons. First, the structurally declining interest rates and the unconventional monetary policy measures have granted privileges to specific groups. Second, the increasingly expansionary monetary policies have negative growth effects, which reduce the scope for compensation of the ones excluded from the privileges. The result is the fading acceptance of the economic order and growing political instability.

Keywords: Hayek, Rawls, Buchanan, privileges, inequality, monetary policy, order of rules, difference principle, economic order

JEL Classification: D630, E020, E520

Suggested Citation

Duarte, Pablo and Schnabl, Gunther, Monetary Policy, Inequality and Political Instability (November 16, 2017). CESifo Working Paper Series No. 6734. Available at SSRN: https://ssrn.com/abstract=3100010

Pablo Duarte

University of Leipzig - Institute for Empirical Research in Economics (IEW) / Econometrics ( email )

Grimmaische Strasse 12
Leipzig, 04109
Germany

affiliation not provided to SSRN

Gunther Schnabl (Contact Author)

University of Leipzig - Institute for Economic Policy ( email )

Institute for Economic Policy
Grimmaische Stra├če 12
Leipzig, 04109
Germany

HOME PAGE: http://www.wifa.uni-leipzig.de/iwp/

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