OeNB HFCS Freitagsseminar with Giacomo Rella

Monetary policy across the wealth distribution

OeNB HFCS Freitagsseminar with Giacomo Rella, Roma Tre University

We use Distributional Financial Accounts and VAR models to investigate the effects of conventional and unconventional monetary policies on wealth distribution in the United States. Our findings show that interest rate cuts and large-scale asset purchases have uneven effects on balance sheets across the wealth distribution, induce heterogeneous capital gains, and shift wealth shares. Conventional monetary policy initially reduces wealth inequality, but increases it in the medium run, while unconventional monetary policy increases the share of wealth owned by the top 1%, albeit only temporarily. Shifts in wealth shares and the unequal growth of net wealth reflect the heterogeneous composition of portfolios, which in turn can generate heterogeneous capital gains. We show that wealthier households enjoy larger increases in capital gains following monetary policy shocks. The larger response of capital gains at the top of the distribution can be explained by the prominent role of interest rate-sensitive and long-lived assets in the portfolio of these households.

Date:
Friday, April,14, 2023, 11:00–12:30 CEST

Venue:
Oesterreichische Nationalbank
Otto-Wagner-Platz 3
1090 Vienna
and online via Webex

Please register by 12 April 2023, at the latest.