Embedded Files
Working Papers
How Dovish Monetary Policy Fuels Inequality [Job Market Paper]
Empirical findings show that expansionary monetary policy reduces the labor-income Gini but raises the total-income Gini. This divergence reflects differences in income and asset composition: top households earn a large share of financial income and hold equity-related assets that benefit from monetary easing, whereas bottom households, whose limited financial assets are largely interest-bearing, face declining returns that widen the financial-income gap. The standard two-agent New Keynesian model—where bottom households lack financial assets and top households hold interest-sensitive ones—cannot capture this mechanism. The modified model reproduces the empirical pattern: Bayesian estimation shows that a 100-basis-point rate cut increases the total-income Gini by about 0.013, consistent with my empirical analysis. Decomposition of the impulse responses reveals that the inequality-reducing effect of rising labor income at the bottom is dominated by a modest increase in financial income at the top and a sharp decline in interest income among bottom households. These findings suggest that the distributional effects of monetary easing depend crucially on household portfolio heterogeneity.
Key words: Monetary policy, Inequality, Financial income
JEL Classification: E52, E44, D63
Property Tax and Housing Wealth Inequality [R&R at Macroeconomic Dynamics ]
This paper examines how property taxation shapes housing wealth inequality. A simple model shows that higher property taxes can worsen inequality by reducing homeownership, while progressive taxes shift burdens toward high-value properties and mitigate this effect. Extending to a heterogeneous-agent model, I find that housing supply elasticity is crucial: inelastic markets allow tax-induced price changes to expand homeownership and reduce inequality. Lump-sum transfers from tax revenue also influence inequality through a similar channel, highlighting the joint role of tax design and general equilibrium forces.
Key words: Wealth Inequality, Property Tax, General Equilibrium Effect, 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
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
Page updated
Google Sites
Report abuse