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Monetary Policy and the Redistribution Channel

  • Adrien Auclert
American Economic Review
vol. 109, no. 6, June 2019
(pp. 2333-67)
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Abstract

This paper evaluates the role of redistribution in the transmission mechanism of monetary policy to consumption. Three channels affect aggregate spending when winners and losers have different marginal propensities to consume: an earnings heterogeneity channel from unequal income gains, a Fisher channel from unexpected inflation, and an interest rate exposure channel from real interest rate changes. Sufficient statistics from Italian and US data suggest that all three channels are likely to amplify the effects of monetary policy.

Citation

Auclert, Adrien. 2019. "Monetary Policy and the Redistribution Channel." American Economic Review, 109 (6): 2333-67. DOI: 10.1257/aer.20160137

Additional Materials

JEL Classification

  • E21 Macroeconomics: Consumption; Saving; Wealth
  • E31 Price Level; Inflation; Deflation
  • E43 Interest Rates: Determination, Term Structure, and Effects
  • E52 Monetary Policy