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Monetary policy, income distribution and semi‐autonomous demand in the US

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  • Joana David Avritzer
  • Maria Cristina Barbieri Goes

Abstract

We empirically explore the role of monetary and distribution shocks on semi‐autonomous demand under a supermultiplier framework. We use quarterly data for the United States from 1968 to 2022 and apply a SVAR model to investigate the effect of changes in financial and distributive variables on autonomous expenditure. We find that: (i) the federal funds rate has a negative and statistically significant effect on autonomous expenditure; (ii) a positive shock in the wage share (WS) has a negative effect on non‐revolving consumer credit (CC) and a transitory positive effect on induced consumption; (iii) a positive shock in aggregated autonomous demand has a positive, persistent, and significant effect on induced consumption and, output, as well as on the adjusted WS; (iv) a positive shock in private residential investment has a positive, persistent and statistically significant effect on other autonomous components of demand and output; (v) while residential investment positively influences CC and durable consumption, the inverse does not hold.

Suggested Citation

  • Joana David Avritzer & Maria Cristina Barbieri Goes, 2025. "Monetary policy, income distribution and semi‐autonomous demand in the US," Metroeconomica, Wiley Blackwell, vol. 76(1), pages 243-270, February.
    • Handle: RePEc:bla:metroe:v:76:y:2025:i:1:p:243-270
    DOI: 10.1111/meca.12479
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