Embedded Files
Working Papers
How Monetary Easing Fuels Inequality [Job Market Paper]
Using a dataset with improved coverage of high-income households, this study shows that although the labor income Gini declines following monetary easing, the total income Gini increases due to a widening gap in financial income. This divergence reflects differences in household income sources and asset composition: top households earn a large share of income from risky financial assets that benefit from monetary easing, while bottom households rely primarily on labor income and hold interest-bearing assets whose returns fall when interest rates decline. To explain this pattern, I develop a modified two-agent New Keynesian framework that incorporates a financial accelerator mechanism. In this framework, risk-taking top households borrow deposits of bottom households as external finance through banks, so that monetary easing lowers the price of risk-taking—the lending spread—and redistributes financial income toward the top. As a result, the model can replicate the opposite impulse responses of the two Gini coefficients, consistent with the empirical findings. It highlights the importance of the financial income channel in understanding the redistributive effects of monetary policy.
Key words: Monetary policy, Inequality, Financial income
JEL Classification: E52, E44, D63
Progressive Property Tax and Housing Wealth Inequality [R&R at Macroeconomic Dynamics ]
How should progressive property taxation be designed? I show that the effectiveness of progressive property taxation depends on encouraging entry into homeownership without generating adverse effects in the rental market. Using a heterogeneous-agent life-cycle model calibrated to the U.S. economy, I find that the welfare-maximizing revenue-neutral reform roughly halves the property tax rate on lower-value housing while more than doubling it on high-value properties worth around 40 times average annual labor income. The resulting increase in homeownership accounts for most of the decline in housing wealth inequality, while lower rents provide additional welfare gains to households that remain renters. Alternative policy experiments show that directly exempting entry-level housing can generate even larger gains and that applying progressivity to own-use housing is more desirable than applying it to rental housing. When housing markets are segmented by quality, introducing progressivity generates smaller welfare gains than in the integrated market but can produce an even larger reduction in housing wealth inequality.
Key words: Wealth Inequality, Property Tax, Progressive Taxation
JEL Classification: E62, R21, R31
Publications
"Effects of Monetary Policy on the Wealth Inequality", Economics Letters, Volume 255, 2025
This paper examines the effect of monetary policy on wealth inequality in the United States using quarterly data from the Distributional Financial Accounts. I construct a Gini coefficient across five wealth groups and analyze its response to high-frequency-identified monetary shocks. Results suggest contractionary policy modestly reduces wealth inequality via lower equity values, but this effect is statistically insignificant and offset by reallocation toward interest-bearing assets. Real assets, such as housing, play a limited role in shaping these distributional dynamics.
Keywords: Monetary policy, Wealth inequality, Asset Portfolio
JEL: E52, E44, D63
Work in Progress
U.S. Monetary Policy Regimes and Spillovers to Emerging Countries: Evidence from Korea
Low Fertility and the Flattening of Women’s M-Curve: A Quantitative Life-Cycle Analysis(with Eunseong Ma)
Effects of Monetary Policy on the Distribution of House Prices
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