This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. Journals
  3. American Economic Review: Insights
  4. September 2022
  5. Five Facts about the Distributional Income Effects of Monetary Policy Shocks

American Economic Review: Insights

ISSN 2640-205X (Print) | ISSN 2640-2068 (Online)

Five Facts about the Distributional Income Effects of Monetary Policy Shocks

  • Niklas Amberg
  • Thomas Jansson
  • Mathias Klein
  • Anna Rogantini Picco
American Economic Review: Insights
vol. 4, no. 3, September 2022
(pp. 289–304)
Download Full Text PDF

Abstract

We document five facts about the distributional income effects of monetary policy shocks using Swedish administrative individual-level data. (i) The effects of monetary policy shocks are U shaped over the income distribution—that is, expansionary shocks increase the incomes of high- and low-income individuals relative to middle-income individuals. (ii) The large effects in the bottom are accounted for by the labor-income response and (iii) those in the top by the capital-income response. (iv) The heterogeneity in the labor-income response is due to the earnings heterogeneity channel, whereas (v) that in the capital-income response is due to the income composition channel.

Citation

Amberg, Niklas, Thomas Jansson, Mathias Klein, and Anna Rogantini Picco. 2022. "Five Facts about the Distributional Income Effects of Monetary Policy Shocks." American Economic Review: Insights, 4 (3): 289–304. DOI: 10.1257/aeri.20210262

Additional Materials

JEL Classification

  • D31 Personal Income, Wealth, and Their Distributions
  • E32 Business Fluctuations; Cycles
  • E52 Monetary Policy
  • J31 Wage Level and Structure; Wage Differentials