In many posts I have identified increasing income inequality in America and variables related to increased inequality. Coibion (et al., 2012) identify an additional “cause” of rising income and consumption inequality — monetary policy. Specifically the authors find:
“Contractionary monetary policy actions systematically increase inequality in labor earnings, total income, consumption and total expenditures. Furthermore, monetary shocks can account for a significant component of the historical cyclical variation in income and consumption inequality.”
Reference
Coibion, Olivier, Gorodnichenko, Yuriy, Kueng, Lorenz, & Silvia, John. (2102). Innocent Bystanders? Monetary Policy and Inequality in the U.S. National Bureau of Economic Research. NBER Working Paper No. 18170