Monetary policy effect on income and wealth inequality mechanism
Zheng Wang, Yufei Chen, Wenjing Sun
TL;DR
This study examines how expansionary monetary policy in China affects income and wealth inequality, finding that it benefits wealthier households more, thus increasing the wealth gap.
Contribution
The study provides new empirical evidence on how monetary policy impacts wealth inequality, particularly in developing countries like China.
Findings
Expansionary monetary policy significantly increases overall income and wealth levels.
Wealthier households benefit more from such policies, widening the wealth gap.
The real estate market boom amplifies the effect of monetary policy on wealth inequality.
Abstract
Since the 1990s, global income and wealth inequality has increased significantly, especially in developing countries, where the imbalance in wealth distribution has become increasingly prominent. This study seeks to thoroughly investigate the effects of expansionary monetary policy on income and wealth inequality, using China as a case study and employing extensive household survey microdata for empirical analysis. The findings indicate that expansionary monetary policy has significantly enhanced overall income and wealth levels. However, when considering the extent of wealth growth, it appears that affluent households have benefited more than their low- and middle-income counterparts, thereby widening the wealth gap. In addition, the real estate market boom played an amplifying role in this process, further deepening the impact of monetary policy on wealth inequality. The findings of…
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Taxonomy
TopicsHousing Market and Economics · Income, Poverty, and Inequality · Financial Literacy, Pension, Retirement Analysis