Shocking aspects of monetary policy on income inequality in the euro area

Jérôme Creel (1) , Mehdi El Herradi (2)

1 OFCE - Observatoire français des conjonctures économiques (Sciences Po)
2 UBM - Université Bordeaux Montaigne

This paper examines the distributional effects of monetary policy, either standard, nonstandard or both, on income inequality in 10 EA countries over the period 2000-2015. We use three different indicators of income inequality in a Panel VAR setting in order to estimate IRFs of inequality to a monetary policy shock. Results suggest that: (i) the distributional effects of ECB’s monetary policy have been modest and (ii) mainly driven in times of conventional monetary policy measures, especially in peripheral countries, while, overall, (iii) standard and non-standard monetary policies do not significantly differ in terms of impact on income inequality.terms of impact on income inequality.

Keywords: Euro area; Monetary policy; Income distribution; Panel Var

Domains: Economics and Finance

Jérôme Creel, Mehdi El Herradi. Shocking aspects of monetary policy on income inequality in the euro area. 2019. ⟨hal-03403233⟩