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Innocent Bystanders? Monetary policy and inequality
Olivier Coibion,Yuriy Gorodnichenko,Lorenz Kueng,John Silvia +3 more
- Vol. 88, pp 70-89
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Coibion et al. as mentioned in this paper studied the effects of monetary policy shocks on consumption and income inequality in the United States since 1980 as measured by the Consumer Expenditure Survey and found that contractionary monetary policy systematically increases inequality in labor earnings, total income, consumption and total expenditures.Abstract:
Author(s): Coibion, Olivier; Gorodnichenko, Yuriy; Kueng, Lorenz; Silvia, John | Abstract: We study the effects of monetary policy shocks on—and their historical contribution to—consumption and income inequality in the United States since 1980 as measured by the Consumer Expenditure Survey. Contractionary monetary policy systematically increases inequality in labor earnings, total income, consumption and total expenditures. Furthermore, monetary policy shocks account for a non-trivial component of the historical cyclical variation in income and consumption inequality. Using detailed micro-level data on income and consumption, we document some of the different channels via which monetary policy shocks affect inequality, as well as how these channels depend on the nature of the change in monetary policy.read more
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Monetary Policy and the Redistribution Channel
TL;DR: In this paper, the role of redistribution in the transmission mechanism of monetary policy to consumption has been evaluated using consumer theory, and it has been shown that redistribution has aggregate effects whenever marginal propensities to consume (MPCs) covary, across households, with balancesheet exposures to aggregate shocks.
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Monetary Policy Communications and their Effects on Household Inflation Expectations
Olivier Coibion,Yuriy Gorodnichenko,Yuriy Gorodnichenko,Yuriy Gorodnichenko,Michael Weber,Michael Weber +5 more
TL;DR: The authors study how different forms of communication influence the inflation expectations of individuals in a randomized controlled trial and find that reading the actual Federal Open Market Committee (FOMC) statement has about the same average effect on expectations as simply being told about the Federal Reserve's inflation target.
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How Quantitative Easing Works: Evidence on the Refinancing Channel
TL;DR: In this paper, the authors show that there is a "flypaper effect" of large-scale asset purchases, where the transmission of unconventional monetary policy to interest rates and origination volumes depends crucially on the assets purchased and degree of segmentation in the market.
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Microeconomic Heterogeneity and Macroeconomic Shocks
Greg Kaplan,Giovanni L. Violante +1 more
TL;DR: In this paper, the authors discuss the emerging literature in macroeconomics that combines heterogeneous agent models, nominal rigidities, and aggregate shocks, and convey two broad messages about the role of household heterogeneity for the response of the macroeconomy to aggregate shocks: 1) the similarity between the Representative Agent New Keynesian (RANK) and HANK frameworks depends crucially on the shock being analyzed; and 2) certain important macroeconomic questions concerning economic fluctuations can only be addressed within heterogeneous agents.
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Measuring Uncertainty and Its Impact on the Economy
TL;DR: The authors proposed a new framework for measuring uncertainty and its effects on the economy, based on a large VAR model with errors whose stochastic volatility is driven by two common unobservable factors, representing aggregate macroeconomic and financial uncertainty.
References
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