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

58 Pages Posted: 1 Nov 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

Swiss Finance Institute; University of Lugano - Faculty of Economics; Centre for Economic Policy Research (CEPR)

John Silvia

affiliation not provided to SSRN

Multiple version iconThere are 4 versions of this paper

Date Written: August 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: Income Inequality, Consumption Inequality, External Shocks, Income Distribution, Prices, Business Fluctuations, And Cycles,money And Interest Rates,monetary Policy, Central Banking, And The Supply Of Money And Credit

Suggested Citation

Coibion, Olivier and Gorodnichenko, Yuriy and Kueng, Lorenz and Silvia, John, Innocent Bystanders? Monetary Policy and Inequality in the U.S (August 2012). IMF Working Paper No. 12/199, Available at SSRN: https://ssrn.com/abstract=2169745

Olivier Coibion (Contact Author)

University of Texas at Austin ( email )

2317 Speedway
Austin, TX Texas 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) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics ( email )

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

Lorenz Kueng

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

HOME PAGE: http://www.sfi.ch/en/

University of Lugano - Faculty of Economics

Via Giuseppe Buffi 13
Lugano, TI 6904
Switzerland

HOME PAGE: http://www.usi.ch/en

Centre for Economic Policy Research (CEPR)

London
United Kingdom

HOME PAGE: http://cepr.org/

John Silvia

affiliation not provided to SSRN

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