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Monetary policy and the top one percent: Evidence from a century of modern economic history

Abstract : This paper examines the distributional e ects of monetary policy in 12 OECD economies between 1920 and 2016. We exploit the implications of the macroeconomic policy trilemma with an external instrument approach to analyse how top income shares respond to monetary policy shocks. The results indicate that monetary tightening strongly decreases the share of national income held by the top one percent and vice versa for a monetary expansion, irrespective of the position of the economy. This e ect (i) holds for the top percentile and the ultra-rich (top 0.1% and 0.01% income shares), while (ii) it does not necessarily induce a decrease in income inequality when considering the entire income distribution. Our ndings also suggest that the e ect of monetary policy on top income shares is likely to be channeled via real asset returns.
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https://halshs.archives-ouvertes.fr/halshs-03080162
Contributor : Elisabeth Lhuillier <>
Submitted on : Thursday, December 17, 2020 - 3:26:58 PM
Last modification on : Tuesday, December 29, 2020 - 3:31:32 AM

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  • HAL Id : halshs-03080162, version 1

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Mehdi El Herradi, Aurélien Leroy. Monetary policy and the top one percent: Evidence from a century of modern economic history. 2020. ⟨halshs-03080162⟩

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