Monetary policy and household inequality

Arbeitspapier

This paper considers how monetary policy produces heterogeneous effects on euro area households, depending on the composition of their income and on the components of their wealth. We first review the existing evidence on how monetary policy affects income and wealth inequality. We then illustrate quantitatively how various channels of transmission - net interest rate exposure, intertemporal substitution and indirect income channels - affect individual euro area households. We find that the indirect income channel has an overwhelming importance, especially for households holding few or no liquid assets. The indirect income channel is therefore also a substantial driver of changes in consumption at the aggregate level.

Object Details

• ISBN: 978-92-899-3275-2
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ECB Working Paper ; No. 2170

Classification and Topics

• Classification: Wirtschaft ; Household Saving; Personal Finance ; Personal Income, Wealth, and Their Distributions ; Macroeconomics: Consumption; Saving; Wealth ; Monetary Policy ; Central Banks and Their Policies
• Subject: Monetary policy ; inequality ; household heterogeneity ; quantitative easing

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Ampudia, Miguel ; Georgarakos, Dimitris ; Slacalek, Jiri ; Tristiani, Oreste ; Vermeulen, Philip ; Violante, Giovanni L.
• Event: Veröffentlichung
• (who): European Central Bank (ECB)
• (where): Frankfurt a. M.
• (when): 2018

Further information

• DOI: doi:10.2866/545402
• Handle: http://hdl.handle.net/10419/183352
• Last update: 10.03.2025, 11:43 AM CET