Distributional impact of monetary policy in the UK: from conventional to unconventional policy

F. Ballabriga Clavería; Karen Davtyan

doi:10.1080/17487870.2021.1949316

Distributional impact of monetary policy in the UK: from conventional to unconventional policy

F. Ballabriga Clavería
, Karen Davtyan^*

^*Corresponding author for this work

Research output: Indexed journal article › Review › peer-review

10 Citations (Scopus)

Abstract

We evaluate the income distributional effect of monetary policy in the UK for the period 1993–2019 using a mixed frequency approach and a high-frequency identification. Our results indicate that expansionary monetary policy increased income inequality during the unconventional policy subperiod 2009–2019. Looking at the income brackets, we find that this increase in inequality is primarily due to the positive impact of expansionary policy on the upper share of income distribution. Our counterfactual analysis reveals that unconventional monetary policy contributed to the increase in inequality and that the response to COVID-19 is likely to do the same.

Original language	English
Pages (from-to)	435-450
Number of pages	16
Journal	Journal of Economic Policy Reform
Volume	25
Issue number	4
DOIs	https://doi.org/10.1080/17487870.2021.1949316
Publication status	Published - 2022

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 1 No Poverty
SDG 10 Reduced Inequalities

Keywords

C32
D31
E52
Monetary policy
distribution channels
identification
income inequality

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10.1080/17487870.2021.1949316

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title = "Distributional impact of monetary policy in the UK: from conventional to unconventional policy",

abstract = "We evaluate the income distributional effect of monetary policy in the UK for the period 1993{\textendash}2019 using a mixed frequency approach and a high-frequency identification. Our results indicate that expansionary monetary policy increased income inequality during the unconventional policy subperiod 2009{\textendash}2019. Looking at the income brackets, we find that this increase in inequality is primarily due to the positive impact of expansionary policy on the upper share of income distribution. Our counterfactual analysis reveals that unconventional monetary policy contributed to the increase in inequality and that the response to COVID-19 is likely to do the same.",

keywords = "C32, D31, E52, Monetary policy, distribution channels, identification, income inequality",

author = "\{Ballabriga Claver{\'i}a\}, F. and Karen Davtyan",

note = "Funding Information: This work was supported by Universitat Ramon LLull under Grant 2018-URL-IR2nQ-040; Banco Sabadell and AGAUR-Generalitat de Catalunya [SGR 640]; We thank the editor, Judith Clifton, the associate editors, Philip Arestis and Salvador Perez-Moreno, and the two anonymous referees for their detailed comments and recommendations. We also gratefully acknowledge helpful comments and suggestions from Juan Dolado, Helmut L{\"u}tkepohl, and the participants of the SAEe symposium in Alicante, the Eighth ECINEQ Meeting in Paris School of Economics, and the Workshop in Time Series Econometrics at the University of Zaragoza. Publisher Copyright: {\textcopyright} 2021 Informa UK Limited, trading as Taylor \& Francis Group.",

year = "2022",

doi = "10.1080/17487870.2021.1949316",

language = "English",

volume = "25",

pages = "435--450",

journal = "Journal of Economic Policy Reform",

issn = "1748-7870",

publisher = "Routledge",

number = "4",

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TY - JOUR

T1 - Distributional impact of monetary policy in the UK

T2 - from conventional to unconventional policy

AU - Ballabriga Clavería, F.

AU - Davtyan, Karen

N1 - Funding Information: This work was supported by Universitat Ramon LLull under Grant 2018-URL-IR2nQ-040; Banco Sabadell and AGAUR-Generalitat de Catalunya [SGR 640]; We thank the editor, Judith Clifton, the associate editors, Philip Arestis and Salvador Perez-Moreno, and the two anonymous referees for their detailed comments and recommendations. We also gratefully acknowledge helpful comments and suggestions from Juan Dolado, Helmut Lütkepohl, and the participants of the SAEe symposium in Alicante, the Eighth ECINEQ Meeting in Paris School of Economics, and the Workshop in Time Series Econometrics at the University of Zaragoza. Publisher Copyright: © 2021 Informa UK Limited, trading as Taylor & Francis Group.

PY - 2022

Y1 - 2022

N2 - We evaluate the income distributional effect of monetary policy in the UK for the period 1993–2019 using a mixed frequency approach and a high-frequency identification. Our results indicate that expansionary monetary policy increased income inequality during the unconventional policy subperiod 2009–2019. Looking at the income brackets, we find that this increase in inequality is primarily due to the positive impact of expansionary policy on the upper share of income distribution. Our counterfactual analysis reveals that unconventional monetary policy contributed to the increase in inequality and that the response to COVID-19 is likely to do the same.

AB - We evaluate the income distributional effect of monetary policy in the UK for the period 1993–2019 using a mixed frequency approach and a high-frequency identification. Our results indicate that expansionary monetary policy increased income inequality during the unconventional policy subperiod 2009–2019. Looking at the income brackets, we find that this increase in inequality is primarily due to the positive impact of expansionary policy on the upper share of income distribution. Our counterfactual analysis reveals that unconventional monetary policy contributed to the increase in inequality and that the response to COVID-19 is likely to do the same.

KW - C32

KW - D31

KW - E52

KW - Monetary policy

KW - distribution channels

KW - identification

KW - income inequality

UR - https://www.scopus.com/pages/publications/85111112626

U2 - 10.1080/17487870.2021.1949316

DO - 10.1080/17487870.2021.1949316

M3 - Review

AN - SCOPUS:85111112626

SN - 1748-7870

VL - 25

SP - 435

EP - 450

JO - Journal of Economic Policy Reform

JF - Journal of Economic Policy Reform

IS - 4

ER -

Distributional impact of monetary policy in the UK: from conventional to unconventional policy

Abstract

UN SDGs

Keywords

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