Five Facts about the Distributional Income Effects of Monetary Policy Shocks

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 i...

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Bibliographic Details
Published in:The American economic review. Insights 2022-09, Vol.4 (3), p.289-304
Main Authors: Amberg, Niklas, Jansson, Thomas, Klein, Mathias, Picco, Anna Rogantini
Format: Article
Language:English
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Summary: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)
ISSN:2640-205X
2640-2068
DOI:10.1257/aeri.20210262