Contractionary monetary policy increases wealth spread, says Philadelphia Fed paper


A working paper published by the Federal Reserve Bank of Philadelphia in September, finds monetary policy does not affect different segments of the population equally.

The authors, Nils Gornemann, Keith Kuester and Makoto Nakajima, find contractionary monetary policy shocks widen a population's wealth gap. For the wealthiest 5%, income and welfare increase, while for the remaining 95% they fall, the authors say. As such, the negative impact of such a shock is much larger if the heterogeneity of

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