Arbeitspapier

Monetary policy and the persistent aggregate effects of wealth redistribution

We identify a sizable wealth redistribution channel which creates a monetary policy trade-off whereby short-term economic stimulus is followed by persistently lower output over the medium term. This trade-off is stronger in economies with more nominal household debt but weakened by a more aggressive monetary policy stance and under price-level targeting. Given this trade-off, low-for-long episodes can lead to persistently depressed output. The mediumterm implications of the wealth redistribution channel rely on the presence of labor supply heterogeneity, which we show both analytically and in the context of an estimated New Keynesian general equilibrium model with household heterogeneity.

Language
Englisch

Bibliographic citation
Series: Bank of Canada Staff Working Paper ; No. 2021-38

Classification
Wirtschaft
Macroeconomics: Consumption; Saving; Wealth
Monetary Policy, Central Banking, and the Supply of Money and Credit: General
Subject
Monetary policy framework
Monetary policy transmission

Event
Geistige Schöpfung
(who)
Kuncl, Martin
Ueberfeldt, Alexander
Event
Veröffentlichung
(who)
Bank of Canada
(where)
Ottawa
(when)
2021

DOI
doi:10.34989/swp-2021-38
Handle
Last update
10.03.2025, 11:46 AM CET

Data provider

This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.

Object type

  • Arbeitspapier

Associated

  • Kuncl, Martin
  • Ueberfeldt, Alexander
  • Bank of Canada

Time of origin

  • 2021

Other Objects (12)