Monetary Policy and Inequality

Monetary policy impacts inequality, albeit to varying extents across households. To better comprehend transmission channels, we consider the diversity of household consumption responses to monetary policy changes. However, this does not substantially modify our comprehension of the overall effects. In terms of achieving distributional goals, inequality has limited influence on the optimal implementation of monetary policy, rendering it an ineffective tool.

Image courtesy of interviewee. November 24, 2023

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