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Effects of unconventional monetary policy on income and wealth distribution: Evidence from United States and Eurozone

Albert Juan-Francisco (University of Valencia, Department of Applied Economics, Valencia, Spain, Post-graduate student)
Gómez-Fernández Nerea (University of Valencia, Department of Applied Economics, Valencia, Spain, Post-graduate student)
Ochando Carlos (University of Valencia, Department of Applied Economics, Valencia, Spain, Post-graduate student)

As an answer to the “Great Recession” and Zero Lower Bound problem, main central banks had to use unconventional monetary policy (UMP). This research focuses on the distributive effects of these measures on household income and household wealth in the United States of America (USA) and the Eurozone. For this purpose, this paper presents four models that were constructed using the Structural Vector Autoregressive methodology (SVAR). The results suggest that the UMPs applied by the Federal Reserve (FED) in the USA could increase wealth and income inequality through the portfolio channel. However, the same results were not observed in the Eurozone.

Keywords: United States of America, Eurozone, income inequality, wealth in equality, unconventional monetary policy