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The Heterogeneous Effect of Monetary Policy Shocks: Evidence for US Households

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  • Tomás Opazo

Abstract

This paper contributes to the growing research on the heterogeneous effects of monetary policy. Using smooth local projections, we estimate the response of consumption expenditure to monetary policy shocks across different groups of households. Our findings show that the expenditures of older households are more responsive to monetary policy shocks than those of young households, indicating the existence of a life-cycle wealth effect. Moreover, households with a mortgage show larger adjustments compared to outright homeowners, reflecting the influence of their balance sheet composition. Additionally, lower-skilled households exhibit larger consumption responses in comparison to high-skilled households. These findings suggest the relevant influence of the income composition channel, earnings heterogeneity, and balance sheet composition channel in the transmission of monetary policy.

Suggested Citation

  • Tomás Opazo, 2023. "The Heterogeneous Effect of Monetary Policy Shocks: Evidence for US Households," Working Papers Central Bank of Chile 992, Central Bank of Chile.
    • Handle: RePEc:chb:bcchwp:992
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