Author: Karen Davtyan (Universidad Carlos III de Madrid)

Title: Unconventional Monetary Policy, and Income and Wealth Inequality.

Abstract: This paper evaluates the distributional effect of US unconventional monetary policy implemented in response to the global financial crisis. This evidence might be helpful for the design of the current unconventional monetary policy measures. The results show that expansionary monetary policy raises income inequality. Unconventional monetary policy reduces earnings inequality along the distribution and in the upper half but raises it in the lower part. The stronger positive effect of unconventional monetary policy on capital income than on labor earnings leads to the increase in income inequality. Unconventional monetary policy has a particularly strong effect on wealth inequality. Following the expansion, the rise in wealth inequality is driven by the relatively larger increase in stock prices than in house prices.