Publication

Central Bank Policies and Income and Wealth Inequality: A Survey

Colciago, A., Samarina, A. & de Haan, J., Sep-2019, In : Journal of Economic Surveys. 33, 4, p. 1199-1231 33 p.

Research output: Contribution to journalArticleAcademicpeer-review

This paper reviews recent research on the relationship between central bank policies and inequality. A new paradigm which integrates sticky-prices, incomplete markets, and heterogeneity among households is emerging, which allows for the joint study of how inequality shapes macroeconomic aggregates and how macroeconomic shocks and policies affect inequality. The new paradigm features multiple distributional channels of monetary policy. Most empirical studies, however, analyze each potential channel of redistribution in isolation. Our review suggests that empirical research on the effects of conventional monetary policy on income and wealth inequality yields mixed findings, although there seems to be a consensus that higher inflation, at least above some threshold, increases inequality. In contrast to common wisdom, conclusions concerning the impact of unconventional monetary policies on inequality are also not clear cut. To better understand policy effects on inequality, future research should focus on the estimation of General Equilibrium models with heterogeneous agents.

Original languageEnglish
Pages (from-to)1199-1231
Number of pages33
JournalJournal of Economic Surveys
Volume33
Issue number4
Publication statusPublished - Sep-2019

    Keywords

  • Income inequality, Macroprudential policy, Monetary policy, Wealth inequality, MONETARY-POLICY, INFLATION, IMPACT, SHOCKS, RISK, REDISTRIBUTION, PARTICIPATION, CONSEQUENCES, HOUSEHOLDS, INFERENCE

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