Arbeitspapier
Impact of quantitative easing and tax policy on income inequality: Evidence from Japan
From April 2013 until May 2016, Japan's monetary base rose from ¥155 trillion to ¥387 trillion as part of the Bank of Japan's (BOJ) quantitative and qualitative easing (QQE) monetary policy for achieving a price stability target of 2%. Although the main objective of the BOJ's quantitative easing (QE) and QQE policy is inflation targeting, this paper aims to shed light on the impact of the policy on income inequality. At the same time, this paper assesses the impact of Japanese tax policy on income inequality through the development of a vector error correction model for the period Q1 2002-Q4 2016 by including the five variables of income inequality, money stock, government income tax, the stock price index, and real gross domestic product. The empirical results reveal that the QE and QQE monetary policy of the Bank of Japan increased income inequality through a rise in the price of financial assets that benefited only richer income groups and resulted in a widening of the income gaps between different income groups. On the other hand, tax policy mitigated part of the adverse effect. The results indicate that monetary policy has both a short-run impact and long-run impact on income inequality, while tax policy has only long-run impact.
- Language
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Englisch
- Bibliographic citation
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Series: ADBI Working Paper ; No. 891
- Classification
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Wirtschaft
Equity, Justice, Inequality, and Other Normative Criteria and Measurement
Monetary Policy
Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
- Subject
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income inequality
quantitative easing
monetary policy
tax policy
Japanese economy
- Event
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Geistige Schöpfung
- (who)
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Yoshino, Naoyuki
Taghizadeh-Hesary, Farhad
Shimizu, Sayoko
- Event
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Veröffentlichung
- (who)
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Asian Development Bank Institute (ADBI)
- (where)
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Tokyo
- (when)
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2018
- Handle
- Last update
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10.03.2025, 11:44 AM CET
Data provider
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
- Yoshino, Naoyuki
- Taghizadeh-Hesary, Farhad
- Shimizu, Sayoko
- Asian Development Bank Institute (ADBI)
Time of origin
- 2018
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