Five Facts about the Distributional Income Effects of Monetary Policy Shocks

Niklas Amberg · Thomas Jansson · Mathias Klein · Anna Rogantini Picco

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Monetary Policy and Economic Impact Income, Poverty, and Inequality Economic Theory and Policy

Abstract

We document five facts about the distributional income effects of monetary policy shocks using Swedish administrative individual-level data. (i) The effects of monetary policy shocks are U shaped over the income distribution—that is, expansionary shocks increase the incomes of high- and low-income individuals relative to middle-income individuals. (ii) The large effects in the bottom are accounted for by the labor-income response and (iii) those in the top by the capital-income response. (iv) The heterogeneity in the labor-income response is due to the earnings heterogeneity channel, whereas (v) that in the capital-income response is due to the income composition channel. (JEL D31, E32, E52, J31)

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References

2015Monetary Policy Surprises, Credit Costs, and Economic Activity 2013High Frequency Identification of Monetary Non-Neutrality: The Information Effect 2018Monetary Policy According to HANK 2018Deconstructing Monetary Policy Surprises: The Role of Information Shocks 2019Monetary Policy and the Redistribution Channel 2012Monetary Policy and Long-Term Real Rates 2017Innocent Bystanders? Monetary policy and inequality 2016The Power of Forward Guidance Revisited

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