Heterogeneous Households, Wealth Disparity and Unconventional Monetary Policy

50 Pages Posted: 18 Nov 2021 Last revised: 15 Aug 2022

See all articles by Damien Parker

Damien Parker

The New School - Department of Economics; Lynn University; Saint Peter's University

Willi Semmler

The New School - Department of Economics; Universitaet Bielefeld; IIASA

Date Written: September 4, 2021

Abstract

This paper explores the income and wealth effects through modeling heterogeneous households while studying the effects of Unconventional Monetary Policy (UMP). The research finds that, through the methodological application of Weighted Expectation Maximization (WEM) Cluster Modeling and subsequent calculation of the Malhalanobis Distance, through recent periods of quantitative easing and low interest rates, there has been notable volatility and bifurcation in the distributions of capital gains and income variables to U.S. households. We herein utilize the weights inherent in modern multiply imputed surveys, such as the Federal Reserve Board's Survey of Consumer Finances (SCF), to apply the EM algorithm to empirically study wealth disparity in the U.S. through the effect of unconventional monetary policy and low interest rates, due to the Financial Crisis of 2008 and the Sars-CoV-2 pandemic, on wealth holders.

Keywords: Wealth disparity, quantitative easing, weighted expectation maximization, cluster modeling, malhalanobis distance, inequality, data science

JEL Classification: B16, B23, G00

Suggested Citation

Parker, Damien and Semmler, Willi, Heterogeneous Households, Wealth Disparity and Unconventional Monetary Policy (September 4, 2021). Available at SSRN: https://ssrn.com/abstract=3917625 or http://dx.doi.org/10.2139/ssrn.3917625

Damien Parker (Contact Author)

The New School - Department of Economics ( email )

Room 1116
6 East 16th Street
New York, NY 10003
United States

Lynn University ( email )

Boca Raton, FL
United States

Saint Peter's University ( email )

Jersey City, NJ 07306

Willi Semmler

The New School - Department of Economics ( email )

65 Fifth Avenue
New York, NY 10003
United States

HOME PAGE: http://www.newschool.edu/nssr/faculty/?id=4e54-6b79-4e41-3d3d

Universitaet Bielefeld ( email )

Universitätsstraße 25
Bielefeld, NRW
Germany

IIASA ( email )

Schlossplatz 1
Laxenburg/Austria, A-2361
Austria

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