Our first set of results concern the effects of monetary policy on disposable income. We show that softer monetary policy increases disposable income at all income levels, but that the gains are highly heterogeneous and monotonically increasing in the income level. As shown in Figure 1, a decrease in the policy rate of one percentage point raises disposable income by less than 0.5% at the bottom of the income distribution, by around 1.5% at the median income level, and by more than 5% for the top 1% over a two-year horizon.
Author(s): Asger Lau Andersen, Niels Johannesen, Mia Jørgensen, José-Luis Peydró
Publication Date: 19 April 2021
Publication Site: Vox EU