Monetary policy impacts income inequality more than you think!
The article explores how monetary policy and redistribution affect different groups in the economy using TANK models. The researchers found that forward guidance is less effective when fewer people participate in asset markets. They also discovered that future monetary shocks mainly impact the economy directly, while current shocks have more indirect effects. In the model, consumption and income inequality are determined by markups, but introducing capital adjustment costs changes this relationship, making consumption inequality more countercyclical than income inequality.