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There is a bit of academic work on this subject, although it all requires some hefty assumptions about the economy and is limited by the lack of data on the very wealthy. I tend to agree with the idea that lower interests are as a whole beneficial for low income people overall. I'm less convinced of the power of monetary policy than Dean Baker is (I feel very weird saying this,) but I see little reason to raise interest rates any time soon. One approach ye olde Structural Vector Autoregression Approach. This is basically a big regression with many variables, that allows you to show causality GIVEN you believe the assumptions you make to identify causality. "To characterize the effects of monetary policy on inequality in the U.S., we follow Romer and Romer (2004, RR henceforth) to identify innovations to monetary policy purged of anticipatory effects related to economic conditions. RR first construct a historical measure of changes in the target Federal Funds rate (FFR) at each FOMC meeting from 1969 until 1996. Using the real-time forecasts of the Fed staff presented in the Greenbooks prior to each FOMC meeting (denoted by F), RR construct a measure of monetary policy shocks defined as the component of policy changes from each meeting which is orthogonal to the Fed’s information set, as embodied by the Greenbook forecasts" Does this (and the extensions made to expand the dataset) identify an unexpected monetary shock? If you believe so, believe these regressions! In this case, loose monetary policy does help out the less wealthy quite a bit. A summery http://www.voxeu.org/article/monetary-policy-and-inequality-us The straight dope http://eml.berkeley.edu/~ygorodni/CGKS_inequality.pdf Alternatively, for those allergic to VARs, here's a nice take (with a good literature review) from the calibration perspective. I'm not gonna try to defend calibration, but I think it can be a useful exercise. However, in this paper there is no role for monetary policy to play for improving aggregate welfare in business cycles if I understand things correctly. Middle class homeowners with a lot of debt are helped a lot, the wealth are hurt, and renters, in this exercise, are pretty much unaffected: http://www.brookings.edu/~/media/research/files/papers/2015/06/01-quantitative-easing-and-inequality/doepke-et-al_inequality_final.pdf
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Jul 28, 2015 05:39
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| # ¿ Apr 29, 2024 09:16 |
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