Title: Monetary policy and wealth inequality over the great recession in the UK: An empirical analysis
Authors: Haroon Mumtaz - Queen Mary University of London (United Kingdom)
Angeliki Theophilopoulou - Brunel university (United Kingdom) [presenting]
Abstract: The UK has experienced a dramatic increase in wealth and income inequality over the past four decades. By using detailed micro information at household level from the Wealth and Assets Survey, we construct monthly historical measures of wealth inequality from 2005 to 2016. We investigate the dynamic relationship between conventional and unconventional monetary policy and whether it played a role in the evolution of wealth inequality measures. The findings suggest that expansionary monetary policy shocks lead to an increase in wealth inequality in the UK and contribute significantly to its fluctuation. The heterogeneous response of wealth at different quantiles suggests that financial easing has a larger positive effect on high income households and the portfolio channel had a stronger impact than the labour income channel to the low percentiles of the distribution. Our evidence also suggests that the policy of quantitative easing may have contributed to the increase in inequality over the Great Recession.