Revealing distributional transmission channels of monetary policy: Evidence from U.S. household-level data

Sammanfattning: Increasing inequality and a slow recovery have prompted interests in the redistributional effects of monetary policy. In order to improve understanding of transmission channels and to enhance the effectiveness of monetary policy, this thesis sets out to explore heterogeneous consumption responses to monetary policy shocks. To this end, U.S. Consumer Expenditure Survey data for the period 1996-2007 is analysed with households being grouped along the three dimensions of age, housing tenure, and financial activity. The results provide evidence on heterogeneous responses of different groups of households. In particular, middle-aged and older households exhibit signifficant changes in expenditure, as well as financially active households. The responses are found to be notably stronger for durable goods consumption. This suggests that monetary policy affects intergenerational inequality.