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How does monetary policy affect income inequality in Japan? Evidence from grouped data

Feldkircher, Martin and Kakamu, Kazuhiko (2018) How does monetary policy affect income inequality in Japan? Evidence from grouped data. Working Papers in Regional Science, 2018/03. WU Vienna University of Economics and Business, Vienna.

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Abstract

We examine the effects of monetary policy on income inequality in Japan using a novel econometric approach that jointly estimates the Gini coefficient based on micro-level grouped data of households and the dynamics of macroeconomic quantities. Our results indicate different effects on income inequality for different types of households: A monetary tightening increases inequality when income data is based on households whose head is employed (workers' households), while the effect reverses over the medium term when considering a broader definition of households. Differences in the relative strength of the transmission channels can account for this finding. Finally we demonstrate that the proposed joint estimation strategy leads to more informative inference while results based on the frequently used two-step estimation approach yields inconclusive results.

Item Type: Paper
Keywords: Income inequality; Monetary policy; Grouped data; Bayesian analysis
Classification Codes: JEL C30, E52, F41, E32
Divisions: Departments > Sozioökonomie
Depositing User: ePub Administrator
Date Deposited: 11 Apr 2018 14:34
Last Modified: 08 Jun 2018 16:34
URI: http://epub.wu.ac.at/id/eprint/6215

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