Does Monetary Policy Affect Income Inequality in the Euro Area?

This paper examines how the ECB's expansionary monetary policy affects income inequality in 10 euro area countries over the period 1999–2014. We distinguish two channels—labor‐market and financial—through which monetary policy can have distributional effects. The labor‐market channel is capture...

Full description

Saved in:
Bibliographic Details
Published inJournal of money, credit and banking Vol. 56; no. 1; pp. 35 - 80
Main Authors SAMARINA, ANNA, NGUYEN, ANH D.M.
Format Journal Article
LanguageEnglish
Published Columbus Ohio State University Press 01.02.2024
Subjects
Employment
Euro
euro area
Income inequality
Labor
Monetary policy
Prices
Wages & salaries
Online AccessGet full text

Cover

More Information
Summary:This paper examines how the ECB's expansionary monetary policy affects income inequality in 10 euro area countries over the period 1999–2014. We distinguish two channels—labor‐market and financial—through which monetary policy can have distributional effects. The labor‐market channel is captured by wages and employment and the financial channel by asset prices and returns. We find that expansionary monetary policy in the euro area reduces income inequality, especially in the periphery countries. The labor‐market channel enhances the equalizing effect: monetary expansion reduces income inequality stronger by raising wages and employment. There is limited evidence for the financial channel.
ISSN:0022-2879
1538-4616
DOI:10.1111/jmcb.13017