Physics

Income inequality metrics

Mathematics

Macroeconomic model

Redistribution (election)

Politics

Redistribution of income and wealth

Statistics

Epistemology

Macroeconomics

Empirical research

Monetary policy

Mathematical analysis

Philosophy

Political science

Econometrics

Survey data collection

Economics

Inflation (cosmology)

Unemployment

Theoretical physics

Inequality

Economic inequality

Monetary economics

Journal of Economic Surveys

This paper reviews recent research on the relationship between central bank policies and inequality. A new paradigm which integrates sticky‐prices, incomplete markets, and heterogeneity among households is emerging, which allows for the joint study of how inequality shapes macroeconomic aggregates and how macroeconomic shocks and policies affect inequality. The new paradigm features multiple distributional channels of monetary policy. Most empirical studies, however, analyze each potential channel of redistribution in isolation. Our review suggests that empirical research on the effects of conventional monetary policy on income and wealth inequality yields mixed findings, although there seems to be a consensus that higher inflation, at least above some threshold, increases inequality. In contrast to common wisdom, conclusions concerning the impact of unconventional monetary policies on inequality are also not clear cut. To better understand policy effects on inequality, future research should focus on the estimation of General Equilibrium models with heterogeneous agents.

CENTRAL BANK POLICIES AND INCOME AND WEALTH INEQUALITY: A SURVEY