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Should the monetary authorities be sensitive to inequality concerns? Empirical evidence for a panel of 62 countries

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URI: http://hdl.handle.net/2183/39170
DOI: https://doi.org/10.1108/JES-05-2022-0262

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2023

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Martín-Legendre, J.I., Castellanos-García, P. and Sánchez-Santos, J.M. (2023). Should the monetary authorities be sensitive to inequality concerns? Empirical evidence for a panel of 62 countries. Journal of Economic Studies, 50(7), 1428-1449. https://doi.org/10.1108/JES-05-2022-0262

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[Abstract]: This paper studies, by means of an empirical approach, how monetary policy might affect the distribution of individual income. After describing the channels through which monetary policy could impinge on income distribution, we carry out a panel analysis of 62 countries that control their monetary policy for the period 1996-2015. Using two possible proxy variables for monetary policy (the monetary aggregate M3 and the real interest rates), the results reveal a significant positive relationship between real interest rates and income inequality measured through the market Gini coefficient and polarization ratios. Our findings suggest that central bankers should be more aware of the redistributive effects of monetary policy.

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This version of the article has been accepted for publication, after peer review, but is not the Version of Record and does not reflect post-acceptance improvements, or any corrections. The Version of Record is available online at: https://doi.org/10.1108/JES-05-2022-0262

Keywords

Monetary aggregate m3 Panel data analysis Gini coefficient Income inequality Monetary policy Real interest rates

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https://doi.org/10.1108/JES-05-2022-0262

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This author accepted manuscript is deposited under a Creative Commons Attribution Non-commercial 4.0 International (CC BY-NC) licence. This means that anyone may distribute, adapt, and build upon the work for non-commercial purposes, subject to full attribution. If you wish to use this manuscript for commercial purposes, please contact permissions@emerald.com.

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This author accepted manuscript is deposited under a Creative Commons Attribution Non-commercial 4.0 International (CC BY-NC) licence. This means that anyone may distribute, adapt, and build upon the work for non-commercial purposes, subject to full attribution. If you wish to use this manuscript for commercial purposes, please contact permissions@emerald.com.

Except where otherwise noted, this item's license is described as This author accepted manuscript is deposited under a Creative Commons Attribution Non-commercial 4.0 International (CC BY-NC) licence. This means that anyone may distribute, adapt, and build upon the work for non-commercial purposes, subject to full attribution. If you wish to use this manuscript for commercial purposes, please contact permissions@emerald.com.