Monetary policy and inequality : The Finnish case

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dc.contributor Bank of Finland Mäki-Fränti, Petri Silvo, Aino Gulan, Adam Kilponen, Juha 2022-01-20T07:54:57Z 2022-01-20T07:54:57Z 2022
dc.identifier.isbn 978-952-323-397-3
dc.identifier.issn 1456-6184
dc.description.abstract We use Finnish household-level registry and survey data to study the effects of ECB’s monetary policy on the distribution of income and wealth. We find that monetary easing has a large positive effect on aggregate economic activity in Finland, but its overall net impact on income and wealth inequality is negligible. Monetary easing increases households’ gross income by reducing unemployment and leading to a general rise in wages, while at the same time it boosts asset prices. These different channels have counteracting effects on income and wealth inequality, as measured by the Gini coefficient and the ratios of income and wealth of the 90th percentile to the 50th percentile. The reduction in aggregate unemployment benefits especially households in lower income quintiles, where the initial rate of unemployment is high. Households in the upper income quintiles, where the rate of employment is higher, benefit relatively more from an increase in wages. An increase in house prices benefits all homeowners. In terms of net wealth, households with large mortgages, in the lower wealth quintiles, benefit the most from an increase in house prices due to a leverage effect. An increase in stock prices, in turn, benefits mainly households in the top wealth quintile.
dc.format.extent 58
dc.language.iso ENG
dc.relation.ispartofseries Bank of Finland Research Discussion Papers
dc.subject Suomi
dc.subject Gini-kerroin
dc.subject.other monetary policy
dc.subject.other income inequality
dc.subject.other wealth inequality
dc.title Monetary policy and inequality : The Finnish case
dc.type Paper
dc.identifier.urn URN:NBN:fi:bof-202201181021
dc.subject.jel D31
dc.subject.jel E32
dc.subject.jel E52 Bank of Finland Research Discussion Papers
dc.series.number 3/2022
dc.series.sortingnumber 0003 20.1.2022
dc.subject.yso rahapolitiikka
dc.subject.yso kotitaloudet (organisaatiot)
dc.subject.yso tulonjako
dc.subject.yso varallisuus
dc.subject.yso tulot
bof-internal.includedInCRIS 1
dc.type.okm D4

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