Editorial: Distributional Effects of Monetary Policy

Abstract

policy” analyses the income distributional effect of monetary policy in the UK during the period 1993–2019, comparing the distributional impact of the conventional and unconventional monetary policy applied during the 1993–2008 and 2009–2019 periods, respectively. They explore the role of income composition and earnings heterogeneity as empirically relevant transmission channels of the distributional impact of monetary policy. While during the conventional monetary policy period (1993–2008) the effect of expansionary monetary policy on income inequality is non-conclusive, they conclude that the unconventional monetary policy shocks increased income inequality during the 2009–2019 period. This is primarily related to stock market gains of the upper part of income distribution because of the Quantitative Easing programs implemented during the decade of 2010s. These implications on income inequality, which differ from the results obtained in some other previous studies, lead the authors to warn of similar results expected as a consequence of the Bank of England’s measures in response to the Covid-19 disruption.