Distributional Effects Of Monetary Policy

Author : Valentina Bonifacio,Mr. Luis Brandao-Marques,Mrs. Nina T Budina,Mr. Balazs Csonto,Chiara Fratto,Philipp Engler,Davide Furceri,Ms. Deniz O Igan,Rui Mano,Mr. Machiko Narita,Murad Omoev,Gurnain Kaur Pasricha,Ms. Helene Poirson
Publisher : International Monetary Fund
Page : 47 pages
File Size : 40,9 Mb
Release : 2021-07-30
Category : Business & Economics
ISBN : 9781513588858

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Distributional Effects of Monetary Policy by Valentina Bonifacio,Mr. Luis Brandao-Marques,Mrs. Nina T Budina,Mr. Balazs Csonto,Chiara Fratto,Philipp Engler,Davide Furceri,Ms. Deniz O Igan,Rui Mano,Mr. Machiko Narita,Murad Omoev,Gurnain Kaur Pasricha,Ms. Helene Poirson Pdf

As central banks across the globe have responded to the COVID-19 shock by rounds of extensive monetary loosening, concerns about their inequality impact have grown. But rising inequality has multiple causes and its relationship with monetary policy is complex. This paper highlights the channels through which monetary policy easing affect income and wealth distribution, and presents some quantitative findings about their importance. Key takeaways are: (i) central banks should remain focused on macro stability while continuing to improve public communications about distributional effects of monetary policy, and (ii) supportive fiscal policies and structural reforms can improve macroeconomic and distributional outcomes.

Author : Davide Furceri,Mr.Prakash Loungani,Ms.Aleksandra Zdzienicka
Publisher : International Monetary Fund
Page : 43 pages
File Size : 44,9 Mb
Release : 2017-01-18
Category : Business & Economics
ISBN : 9781475568356

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The Effects of Monetary Policy Shocks on Inequality by Davide Furceri,Mr.Prakash Loungani,Ms.Aleksandra Zdzienicka Pdf

This paper provides new evidence of the effect of monetary policy shocks on income inequality. Using a measure of unanticipated changes in policy rates for a panel of 32 advanced and emerging market countries over the period 1990-2013, the paper finds that contractionary (expansionary) monetary actions increase (reduce) income inequality. The effect, however, varies over time, depending on the type of the shocks (tightening versus expansionary monetary policy) and the state of the business cycle, and across countries depending on the share of labor income and redistribution policies. In particular, we find that the effect is larger for positive monetary policy shocks, especially during expansions. Looking across countries, we find that the effect is larger in countries with higher labor share of income and smaller redistribution policies. Finally, while an unexpected increase in policy rates increases inequality, changes in policy rates driven by an increase in growth are associated with lower inequality.

Author : Mr.Olivier Coibion,Mr.Yuriy Gorodnichenko,Mr.Lorenz Kueng,Mr.John Silvia
Publisher : International Monetary Fund
Page : 57 pages
File Size : 54,8 Mb
Release : 2012-08-01
Category : Business & Economics
ISBN : 9781475505498

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Innocent Bystanders? Monetary Policy and Inequality in the U.S. by Mr.Olivier Coibion,Mr.Yuriy Gorodnichenko,Mr.Lorenz Kueng,Mr.John Silvia Pdf

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.

Author : Mr. Ken Miyajima
Publisher : International Monetary Fund
Page : 24 pages
File Size : 52,8 Mb
Release : 2021-03-19
Category : Business & Economics
ISBN : 9781513574356

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Monetary Policy, Inflation, and Distributional Impact: South Africa’s Case by Mr. Ken Miyajima Pdf

The South African Reserve Bank has continued to fulfill its constitutional mandate to protect the value of the local currency by keeping inflation low and steady. This paper provides evidence that monetary policy tightening aimed at maintaining low and stable inflation could at the same time reduce consumption inequality over a 12–18 month horizon, commonly understood as the transmission lag of monetary policy action to the real economy, and similar to the distance between survey waves used in the analysis. In response to “exogenous” monetary policy tightening, the real consumption of individuals at lower ends of the consumption distribution declines relatively modestly, or even increases. With greater reliance on government transfers, thus smaller reliance on labor income, and relatively larger food consumption, these individuals appear to benefit mainly from lower inflation. By contrast, the real consumption of individuals at higher ends of the consumption distribution is more likely to decline due to lower labor income, weaker asset price performance, and higher debt service cost.

Author : ZACHMANN. GUSTAV GEORG (FREDRIKSSON. GREGORY, CLAEYS.),Fredriksson Gustav,Claeys Grégory
Publisher : Unknown
Page : 112 pages
File Size : 47,9 Mb
Release : 2018-12-20
Category : Science
ISBN : 907891047X

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The Distributional Effects of Climate Policies by ZACHMANN. GUSTAV GEORG (FREDRIKSSON. GREGORY, CLAEYS.),Fredriksson Gustav,Claeys Grégory Pdf

Policymakers will not accept forceful decarbonisation policies if they lead to visibly increasing inequality within their societies. The distributive effects of climate policies need to be addressed. This report provides a selective review of recent academic literature and experience on the distributional effects of climate policies.

Author : Laurence M. Ball,Davide Furceri,Mr.Daniel Leigh,Mr.Prakash Loungani
Publisher : International Monetary Fund
Page : 24 pages
File Size : 52,9 Mb
Release : 2013-06-21
Category : Business & Economics
ISBN : 9781475551945

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The Distributional Effects of Fiscal Consolidation by Laurence M. Ball,Davide Furceri,Mr.Daniel Leigh,Mr.Prakash Loungani Pdf

This paper examines the distributional effects of fiscal consolidation. Using episodes of fiscal consolidation for a sample of 17 OECD countries over the period 1978–2009, we find that fiscal consolidation has typically had significant distributional effects by raising inequality, decreasing wage income shares and increasing long-term unemployment. The evidence also suggests that spending-based adjustments have had, on average, larger distributional effects than tax-based adjustments.

Author : Willem Thorbecke
Publisher : Unknown
Page : 64 pages
File Size : 53,9 Mb
Release : 1999
Category : United States
ISBN : OCLC:246633556

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Further Evidence on the Distributional Effects of Disinflationary Monetary Policy by Willem Thorbecke Pdf

Author : Davide Furceri,Jun Ge,Mr.Prakash Loungani,Mr.Giovanni Melina
Publisher : International Monetary Fund
Page : 39 pages
File Size : 55,9 Mb
Release : 2018-03-14
Category : Business & Economics
ISBN : 9781484345412

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The Distributional Effects of Government Spending Shocks in Developing Economies by Davide Furceri,Jun Ge,Mr.Prakash Loungani,Mr.Giovanni Melina Pdf

We construct unanticipated government spending shocks for 103 developing countries from 1990 to 2015 and study their effects on income distribution. We find that unanticipated fiscal consolidations lead to a long-lasting increase in income inequality, while fiscal expansions lower inequality. The results are robust to several measures of income distribution and size of the fiscal shocks, to an alternative identification strategy, across expansions and recessions and across country groups (low-income countries versus emerging markets). An additional contribution of the paper is the computation of the medium-term inequality multiplier. This is on average about 1 in our sample, meaning that a cumulative decrease in government spending of 1 percent of GDP over 5 years is associated with a cumulative increase in the Gini coefficient over the same period of about 1 percentage point. The multiplier is larger for total government expenditure than for public investment and consumption (with the former having larger effect), likely due to the redistributive role of transfers. Finally, we find that (unanticipated) fiscal consolidations lead to an increase in poverty.

Author : Mr.Gerd Schwartz,Mrs.Teresa Ter-Minassian
Publisher : International Monetary Fund
Page : 29 pages
File Size : 44,9 Mb
Release : 1995-08-01
Category : Business & Economics
ISBN : 9781451850581

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The Distributional Effects of Public Expenditure by Mr.Gerd Schwartz,Mrs.Teresa Ter-Minassian Pdf

It is commonly agreed that economic policies, including budgetary policies, can have potentially strong distributional effects. Traditional economic analysis held that economic policies affected the income distribution primarily through their impact on the rate of growth. More recently, it has come to be recognized that qualitative aspects of economic growth are probably more important than the rate of growth itself. While recent research has confirmed the potential role of expenditure policies as a redistributive tool, it has also shown that redistribution does not necessarily have to come at the expense of economic growth and efficiency. Although there are substantial analytical and technical problems to be faced in the design of equitable and cost-effective public expenditure programs, unfavorable distributional outcomes of these programs can usually be traced more to political and institutional pressures than to purely technical factors.

Author : Ilker Domaç
Publisher : World Bank Publications
Page : 44 pages
File Size : 50,5 Mb
Release : 1999
Category : Credit
ISBN : 8210379456XXX

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The Distributional Consequences of Monetary Policy by Ilker Domaç Pdf

Policymakers in Malaysia should weigh the distributional consequences of policy actions. They should also consider measures to alleviate the disproportionate impact that market imperfections have on small and medium-size industries.

Author : Stefan Hohberger,Romanos Priftis,Lukas Vogel
Publisher : Unknown
Page : 32 pages
File Size : 45,6 Mb
Release : 2018
Category : Econometric models
ISBN : 9279934066

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The Distributional Effects of Conventional Monetary Policy and Quantitative Easing by Stefan Hohberger,Romanos Priftis,Lukas Vogel Pdf

This paper compares the distributional effects of conventional monetary policy and quantitative easing (QE) within an estimated open-economy DSGE model of the euro area. The model includes two groups of households: (i) wealthier households, who own financial assets and are able to smooth consumption over time, and (ii) poorer households, who only receive labor and transfer income and live ‘hand to mouth’. We use the model to compare the impact of policy shocks on constructed measures of income and wealth inequality (net disposable income, net asset position, and relative per-capita income). Except for the short term, expansionary conventional policy and QE shocks tend to mitigate income and wealth inequality between the two population groups. In light of the coarse dichotomy of households that abstracts from richer income and wealth dynamics at the individual level, the analysis emphasizes the functional distribution of income.

Author : Davide Furceri,Bin Grace Li
Publisher : International Monetary Fund
Page : 39 pages
File Size : 42,5 Mb
Release : 2017-10-20
Category : Business & Economics
ISBN : 9781484320709

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The Macroeconomic (and Distributional) Effects of Public Investment in Developing Economies by Davide Furceri,Bin Grace Li Pdf

This paper provides new empirical evidence of the macroeconomic effects of public investment in developing economies. Using public investment forecast errors to identify unanticipated changes in public investment, the paper finds that increased public investment raises output in the short and medium term, with an average short-term fiscal multiplier of about 0.2. We find some evidence that the effects are larger: (i) during periods of slack; (ii) in economies operating with fixed exchange rate regimes; (iii) in more closed economies; (iv) in countries with lower public debt; and (v) in countries with higher investment efficiency. Finally, we show that increases in public investment tend to lower income inequality.

Author : Mr.Olivier Coibion,Mr.Yuriy Gorodnichenko,Mr.Gee Hee Hong
Publisher : International Monetary Fund
Page : 75 pages
File Size : 45,5 Mb
Release : 2012-08-01
Category : Business & Economics
ISBN : 9781475505573

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The Cyclicality of Sales, Regular and Effective Prices by Mr.Olivier Coibion,Mr.Yuriy Gorodnichenko,Mr.Gee Hee Hong Pdf

We study the cyclical properties of sales, regular price changes and average prices paid by consumers ("effective" prices) in a dataset containing prices and quantities sold for numerous retailers across a variety of U.S. metropolitan areas. Both the frequency and size of sales fall when local unemployment rates rise and yet the inflation rate for effective prices paid by consumers declines significantly with higher unemployment. This discrepancy can be reconciled by consumers reallocating their expenditures across retailers, a feature of the data which we document and quantify. We propose a simple model with household shopping effort and store-switching consistent with these stylized facts and document its implications for business cycles and policymakers.

Author : A. B. Atkinson,Thomas Piketty
Publisher : OUP Oxford
Page : 984 pages
File Size : 41,6 Mb
Release : 2010-04-01
Category : Business & Economics
ISBN : 9780191500886

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Top Incomes by A. B. Atkinson,Thomas Piketty Pdf

A rapidly growing area of economic research investigates the top of the income distribution using data from income tax records. This volume brings together studies of top incomes for twelve countries from around the world, including China, India, Japan, Argentina and Indonesia. Together with the first volume, published in 2007, the studies cover twenty two countries. They have a long time span, the earliest data relating to 1875 (for Norway), allowing recent developments to be placed in historical perspective. The volume describes in detail the source data and the methods employed. It will be an invaluable reference source for researchers in the field. Individual country chapters deal with the specific nature of the data for each of the countries, and describe the long-term evolution of top income shares. In the countries as a whole, dramatic changes have taken place at the top of the income distribution. Over the first part of the century, top income shares fell markedly. This largely took the form of a reduction in capital incomes. The different authors examine the impact of the First and Second World Wars, contrasting countries that were and were not engaged. They consider the impact of depressions and banking crises, and pay particular attention to the impact of progressive taxation. In the last 30 years, the shares of top incomes have increased markedly in the US and other Anglo-Saxon countries, reflecting the increased dispersion of earnings. The volume includes statistics on the much-discussed top pay and bonuses, providing a global perspective that discusses important differences between countries such as the lesser increase in Continental Europe. This book, together with volume 1, documents this interesting development and explores the underlying causes. The findings are brought together in a final summary chapter by Atkinson, Piketty and Saez.

Author : Davide Furceri,Mr.Prakash Loungani,Mr.Jonathan David Ostry
Publisher : International Monetary Fund
Page : 61 pages
File Size : 41,5 Mb
Release : 2018-04-06
Category : Business & Economics
ISBN : 9781484350898

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The Aggregate and Distributional Effects of Financial Globalization: Evidence from Macro and Sectoral Data by Davide Furceri,Mr.Prakash Loungani,Mr.Jonathan David Ostry Pdf

We take a fresh look at the aggregate and distributional effects of policies to liberalize international capital flows—financial globalization. Both country- and industry-level results suggest that such policies have led on average to limited output gains while contributing to significant increases in inequality—that is, they pose an equity–efficiency trade-off. Behind this average lies considerable heterogeneity in effects depending on country characteristics. Liberalization increases output in countries with high financial depth and those that avoid financial crises, while distributional effects are more pronounced in countries with low financial depth and inclusion and where liberalization is followed by a crisis. Difference-indifference estimates using sectoral data suggest that liberalization episodes reduce the share of labor income, particularly for industries with higher external financial dependence, those with a higher natural propensity to use layoffs to adjust to idiosyncratic shocks, and those with a higher elasticity of substitution between capital and labor. The sectoral results underpin a causal interpretation of the findings using macro data.