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Monetary Policy and Inequality in the UK

Author

Listed:
  • Haroon Mumtaz

    (Queen Mary University of London)

  • Angeliki Theophilopoulou

    (University of Westminister)

Abstract

The UK has experienced a dramatic increase in earnings and income inequality over the past fourdecades. We use detailed micro level information to construct historical measures of inequalityfrom 1968 to 2008. We study whether monetary policy shocks played a significant role in explainingthis increase before and after 1993. We find that contractionary monetary policy shocks lead to adeterioration in earnings and income inequality and contribute to its fluctuation. Our evidencesuggest that this effect is smaller during the inflation targeting period.

Suggested Citation

  • Haroon Mumtaz & Angeliki Theophilopoulou, 2015. "Monetary Policy and Inequality in the UK," Working Papers 738, Queen Mary University of London, School of Economics and Finance.
    • Handle: RePEc:qmw:qmwecw:738
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    File URL: https://www.qmul.ac.uk/sef/media/econ/research/workingpapers/2015/items/wp738.pdf
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    Citations

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    Cited by:

    1. Mumtaz, Haroon & Theophilopoulou, Angeliki, 2017. "The impact of monetary policy on inequality in the UK. An empirical analysis," European Economic Review, Elsevier, vol. 98(C), pages 410-423.
    2. Zeyyad Mandalinci, 2015. "Effects of Monetary Policy Shocks on UK Regional Activity: A Constrained MFVAR Approach," Working Papers 758, Queen Mary University of London, School of Economics and Finance.
    3. Andrea Colciago & Anna Samarina & Jakob de Haan, 2019. "Central Bank Policies And Income And Wealth Inequality: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 33(4), pages 1199-1231, September.
    4. Mumtaz, Haroon & Theophilopoulou, Angeliki, 2017. "The impact of monetary policy on inequality in the UK. An empirical analysis," European Economic Review, Elsevier, vol. 98(C), pages 410-423.
    5. Dr. Ameenullah Aman & Dr. Usman Ahmad & Sumera Muhammad Saleem, 2021. "Investigating the Link Between Macroeconomic Factors and Income Inequality of Asian Countries," iRASD Journal of Economics, International Research Alliance for Sustainable Development (iRASD), vol. 3(3), pages 376-387, December.

    More about this item

    Keywords

    Inequality; Earnings; Income; Mixed frequency Bayesian SVAR; Monetary policy shocks;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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