TY - JOUR

T1 - Does inflation targeting increase income inequality?

AU - Altunbas, Yener

AU - Thornton, John

PY - 2022/7/28

Y1 - 2022/7/28

N2 - We contribute to the growing empirical literature on the impactof monetary policy on income distribution by focusing on the impact of adopting an inflation targeting (IT) regime to guide monetary policy. We assess the impact employing a panel of 121 advanced and developing economies, including 27 IT adopters, during the period 1971–2015. Our results suggest that IT adoption has contributed to greater inequality of household income as measured by the Gini coefficient and to a reduced share of GDP going to labor compensation. The results are robust to alternative estimation methodologies and to variations in the sample with respect to countries and data frequency.

AB - We contribute to the growing empirical literature on the impactof monetary policy on income distribution by focusing on the impact of adopting an inflation targeting (IT) regime to guide monetary policy. We assess the impact employing a panel of 121 advanced and developing economies, including 27 IT adopters, during the period 1971–2015. Our results suggest that IT adoption has contributed to greater inequality of household income as measured by the Gini coefficient and to a reduced share of GDP going to labor compensation. The results are robust to alternative estimation methodologies and to variations in the sample with respect to countries and data frequency.

KW - income distribution

KW - inflation targeting

KW - monetary policy

U2 - https://doi.org/10.1080/01603477.2022.2101475

DO - https://doi.org/10.1080/01603477.2022.2101475

M3 - Article

VL - 45

SP - 558

EP - 580

JO - Journal of Post Keynesian Economics

JF - Journal of Post Keynesian Economics

IS - 4

M1 - 4

ER -