The distributive impact of unconventional monetary policies – old and new

Gobbi, Lucio and D'Ippoliti, Carlo and Temperini, Jacopo (2024): The distributive impact of unconventional monetary policies – old and new. Published in: Review of Political Economy (September 2024)

Abstract

In this paper we analyze the impact of less conventional monetary policy tools on the personal and functional distribution of income. We focus on the issuance of central bank digital currency (CBDC) in a comparative perspective, using a stock-flow consistent model of the eurozone economy. We consider two kinds of policies: helicopter money policies such as Quantitative Easing and the issuance of a CBDC; and scenarios not based on balance sheet expansions, such as an interest rate policy following the Pasinetti Rule, or a sterilized issuance of CBDC. Monetary policies using CBDCs tend to increase the wage share at the expense of financial rents. The targeted issuance of CBDCs to firms might produce an increase in GDP, corporate profits, and the wage share. The Pasinetti Rule reduces personal income inequality the most, but if applied mechanically, its impact on growth is also the least desirable.

• Item Type: MPRA Paper
• Language: English
• Keywords: Inequality; Monetary policy; Central Bank Digital Currencies; Pasinetti Rule
• Subjects: E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models > E12 - Keynes ; Keynesian ; Post-Keynesian; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit; G - Financial Economics > G0 - General; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty

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