the impact of monetary and tax policy on income inequality in japan this paper assesses the effects of the most recent monetary policy behaviour of the bank of japan in particular zero interest rate policy and negative interest rate policy and japanese tax policy on income inequality in this country during the period of 2002q1 to 2017q3 the vector error correction model vecm that develops in this research shows that increase in money stock m1 through quantitative easing qe and quantitative and qualitative easing qqe policies of the boj significantly increases the income inequality on the contrary japanese tax policy was effective in reducing the income inequality variance decomposition results show that increasing of income inequality by monetary policy is larger when comparing to decreasing effects of tax policy on income inequality cointegration and vecm results show that monetary policy has both short run and long run impacts but for tax policy paper could not find any significant short run impact on income inequality in addition paper found that technological progress only in long run can reduce the income inequality by increasing the marginal productivity of labour with positive impacts on employment and wages

explaining the striking similarity in macroeconomic policy responses to the great recession the institutional power of macroeconomic governance this article offers an institutional explanation for the strikingly similar configuration of macroeconomic policy responses of advanced capitalist economies to the great recession in recent decades advanced economies have adopted a common structure of macroeconomic governance which organizes macroeconomic policymaking around monetary policy operated by autonomous central banks and sets limits on politicians policymaking discretion during the great recession this macroeconomic governance allowed central banks to enact unconstrained monetary expansion and governments to enact constrained fiscal expansion the argument here is empirically substantiated by focusing at how macroeconomic policies in response to the great recession have evolved in australia and sweden as well as by looking at parallel developments in the united kingdom and the united states

the federal funds rate and the channels of monetary transmission the authors show that the interest rate on federal funds is extremely informative about future movements of real macroeconomic variables then they argue that the reason for this forecasting success is that the funds rate sensitively records shocks to the supply of bank reserves that is the funds rate is a good indicator of monetary policy actions finally using innovations to the funds rate as a measure of changes in policy the authors present evidence consistent with the view that monetary policy works at least in part through credit i e bank loans as well as through money i e bank deposits copyright 1992 by american economic association

a reverse robin hood the distributional implications of non standard monetary policy for italian households abstract we study empirically the distributional implications of ecb non standard monetary policy by exploiting a rich micro dataset on italian households income and wealth and contemporaneously taking into account all relevant transmission channels our results do not support the claim that an unconventional monetary loosening acts as a reverse robin hood larger benefits accrue to households at the bottom of the income scale as the effects via the stimulus to economic activity and employment outweigh those via financial markets the response of net wealth is moderately u shaped less wealthy households take advantage of their leveraged positions wealthier households of their larger share of financial assets overall the effects on inequality are negligible the results also suggest that savers are not hurt as the decrease in the remuneration of assets is compensated by support to labour income and by capital gains

the distributional effects of conventional monetary policy and quantitative easing evidence from an estimated dsge model abstract this paper compares the distributional effects of conventional monetary policy and quantitative easing qe within an estimated open economy dsge model of the euro area the model includes two groups of households i wealthier households who own financial assets and are able to smooth consumption over time and ii poorer households who only receive labor and transfer income and live hand to mouth we use the model to compare the impact of policy shocks on constructed measures of income and wealth inequality net disposable income net asset position and relative per capita income except for the short term expansionary conventional policy and qe shocks tend to mitigate income and wealth inequality between the two population groups in light of the coarse dichotomy of households that abstracts from richer income and wealth dynamics at the individual level the analysis emphasizes the functional distribution of income

a financial macro network approach to climate policy evaluation abstract existing approaches to assess the economic impact of climate policies tend to overlook the financial sector and to focus only on direct effects of policies on the specific institutional sector they target neglecting possible feedbacks between sectors thus underestimating the overall policy effect to fill in this gap we develop a methodology based on financial networks which allows for analyzing the transmission throughout the economy of positive or negative shocks induced by the introduction of specific climate policies we apply the methodology to empirical data of the euro area to identify the feedback loops between the financial sector and the real economy both through direct and indirect chains of financial exposures across multiple financial instruments by focusing on climate policy induced shocks that affect directly either the banking sector or non financial firms we analyze the reinforcing feedback loops that could amplify the effects of shocks on the financial sector and then cascade on the real economy our analysis helps to understand the conditions for virtuous or vicious cycles to arise in the climate finance nexus and to provide a comprehensive assessment of the economic impact of climate policies

rabbit hutches on postage stamps planning development and political economy the supply of land for housing has been restricted by planning controls the prices of land and of houses have risen in consequence as a result land has been used with increasing intensity with infill town cramming and smaller houses on less land rabbit hutches on postage stamps a destruction of the urban environment of the many to preserve a rural environment for a few why is the supply of land restricted firstly it is suggested because the british misapprehend the degree of urbanisation in their own country secondly because rural and farming interests ensure that the planning system operates in their favour and thirdly and most importantly because the planning process is tilted in favour of the existing residents of an area who seek to preserve their environment by resisting intruders a number of suggestions are made to resolve the situation by increasing the supply of land or reducing the demand for land

the impact of inequality on the transmission of monetary policy abstract we consider a model to detect the relation between household debt and the transmission of monetary policy in an eu member state with independent monetary policy and high income inequality romania we find that households response to changes in monetary conditions depends on their income and indebtedness profile the transmission of monetary policy is more effective for middle income households which are more indebted and have adjustable rates as lower policy rates ease the consumption constraints on these households low income households respond mainly to budgetary policies as the increase in disposable income matters most for the bottom quintile top income quintile reacts more to monetary policy than bottom quintile but less than middle income quintiles lower inequality is associated with stronger effectiveness and higher homogeneity of monetary policy transmission in turn higher inequality is associated with less effectiveness and higher heterogeneity of the impact of the monetary policy

did inequality cause the u s financial crisis in his widely discussed book fault lines 2010 raghuram rajan argues that many low and middle income consumers have reduced their saving and increased debt since income inequality started to soar in the united states in the early 1980s this has temporarily kept private consumption and employment high but it also contributed to the creation of a credit bubble this surge in household indebtedness turned out to be unsustainable in the financial crisis starting in 2007 although rajan and others emphasize the role of government in promoting credit to those households with declining relative permanent incomes other strands of the literature have focused more explicitly on the implications of rising inequality for aggregate demand and households demand for credit these differences in emphasis may explain why the literature on the inequality crisis nexus appears somewhat disparate even though the various strands are far from mutually exclusive but rather complement each other we therefore place the rajan hypothesis in the context of competing theories of consumption and survey the empirical literature on the effects of inequality on household behaviour we conclude that the empirical evidence calls for a renaissance of the relative income hypothesis of consumption

the effects of monetary policy shocks on inequality abstract this paper provides new evidence of the effect of conventional monetary policy shocks on income inequality we construct a measure of unanticipated changes in policy rates changes in short term interest rates that are orthogonal to unexpected changes in growth and inflation news for a panel of 32 advanced and emerging market countries over the period 1990 2013 our main finding is that contractionary monetary policy shocks increase income inequality on average the effect is asymmetric tightening of policy raises inequality more than easing lowers it and depends on the state of the business cycle we find some evidence that the effect increases with the share of labor income and is mitigated by redistribution policies finally while an unexpected increase in policy rates increases inequality changes in policy rates driven by an increase in growth and inflation are associated with lower inequality

on inflation as a regressive consumption tax abstract evidence on the portfolio holdings and transaction patterns of households suggests that the burden of inflation is not evenly distributed we build a monetary growth model consistent with key features of cross sectional household data and use this framework to study the distributional impact of inflation at the aggregate level our model economy behaves similar to standard monetary growth models within the representative agent abstraction inflation has however important distributional effects since it is effectively a regressive consumption tax thus neglecting the distributional consequences of inflation may prove misleading in assessing the effects of inflation in our economy

the impact of un conventional expansionary monetary policy on income inequality lessons from japan this paper analyzes the impact of conventional and unconventional monetary policy on income inequality in japan using hitherto unexplored data from the japan household panel survey empirical evid

the evolution of income concentration in japan 1886 2005 evidence from income tax statistics abstract this paper studies the evolution of income concentration in japan from 1886 to 2005 by constructing long run series of top income shares and top wage income shares using income tax statistics we find that i income concentration was extremely high throughout the pre wwii period during which the nation underwent rapid industrialization ii a drastic de concentration of income at the top took place in 1938 1945 iii income concentration remained low during the rest of the century but shows some sign of increase in the last decade and iv top income composition in japan has shifted dramatically from capital income to employment income over the course of the twentieth century we attribute the precipitous fall in income concentration during wwii primarily to the collapse of capital income due to wartime regulations and inflation we argue that the change in the institutional structure under the occupational reforms made the one time income de concentration difficult to reverse in contrast t

central bank policies and income and wealth inequality a survey this paper reviews recent research on the relationship between central bank policies and inequality a new paradigm which integrates sticky prices incomplete markets and heterogeneity among households is emerging which allows for the joint study of how inequality shapes macroeconomic aggregates and how macroeconomic shocks and policies affect inequality the new paradigm features multiple distributional channels of monetary policy most empirical studies however analyze each potential channel of redistribution in isolation our review suggests that empirical research on the effects of conventional monetary policy on income and wealth inequality yields mixed findings although there seems to be a consensus that higher inflation at least above some threshold increases inequality in contrast to common wisdom conclusions concerning the impact of unconventional monetary policies on inequality are also not clear cut to better understand policy effects on inequality future research should focus on the estimation of general equilibrium models with heterogeneous agents

unconventional monetary policy and inequality is japan unique unconventional monetary policy ump influences inequality through two channels that work in opposite directions a labour market channel more employment higher wages and a financial market cha

does inequality lead to a financial crisis abstract the recent global crisis has sparked interest in the relationship between income inequality credit booms and financial crises rajan 2010 and kumhof and ranciere 2011 propose that rising inequality led to a credit boom and eventually to a financial crisis in the us in the first decade of the 21st century as it did in the 1920s data from 14 advanced countries between 1920 and 2000 suggest these are not general relationships credit booms heighten the probability of a banking crisis but we find no evidence that a rise in top income shares leads to credit booms instead low interest rates and economic expansions are the only two robust determinants of credit booms in our data set anecdotal evidence from us experience in the 1920s and in the years up to 2007 and from other countries does not support the inequality credit crisis nexus rather it points back to a familiar boom bust pattern of declines in interest rates strong growth rising credit asset price booms and crises

defending the one percent abstract imagine a society with perfect economic equality then one day this egalitarian utopia is disturbed by an entrepreneur with an idea for a new product think of the entrepreneur as steve jobs as he develops the ipod j k rowling as she writes her harry potter books or steven spielberg as he directs his blockbuster movies the new product makes the entrepreneur much richer than everyone else how should the entrepreneurial disturbance in this formerly egalitarian outcome alter public policy should public policy remain the same because the situation was initially acceptable and the entrepreneur improved it for everyone or should government policymakers deplore the resulting inequality and use their powers to tax and transfer to spread the gains more equally in my view this thought experiment captures in an extreme and stylized way what has happened to us society over the past several decades since the 1970s average incomes have grown but the growth has not been uniform across the inco

global economic growth and agricultural land conversion under uncertain productivity improvements in agriculture we study how stochasticity in the evolution of agricultural productivity interacts with economic and population growth at the global level we use a two sector schumpeterian model of growth in which a manufacturing sector produces the traditional consumption good and an agricultural sector produces food to sustain contemporaneous population agriculture demands land as an input itself treated as a scarce form of capital in our model both population and sectoral technological progress are endogenously determined and key technological parameters of the model are structurally estimated using 1960 2010 data on world gdp population cropland and technological progress introducing random shocks to the evolution of total factor productivity in agriculture we show that uncertainty optimally requires more land to be converted into agricultural use as a hedge against production shortages and that it significantly affects both optimal consumption and population trajectories

monetary policy inequality and political instability voters in the industrialised countries are increasingly expressing dissatisfaction by dissenting from the established political parties and candidates based on the concepts of justice by hayek rawls and buchanan we argue that the growing dissatisfaction is rooted in the asymmetric pattern of monetary policies since the mid 1980s for two reasons first the structurally declining interest rates and the unconventional monetary policy measures have granted privileges to specific groups second the increasingly expansionary monetary policies have negative growth effects which have reduced the scope for compensation of the ones excluded from the privileges as a result the acceptance of the prevailing economic and political order is undermined and political instability increases

does unconventional monetary policy affect inequality evidence from japan inequality has been largely ignored in the literature and practice of monetary policy but is gaining more attention recently here we exclusively focus on the impact of unconventional monetary policy ump on inequality we look at how the recent ump in japan affected inequality using household survey data our vector auto regression var results show that ump widened income inequality after 2008q3 as the bank of japan boj resumed its zero interest rate policy and reinstated ump this is largely due to the portfolio channel to the best of our knowledge this is the first study to empirically analyse the distributional impact of ump japan s extensive experience with ump may hold important policy implications for other countries

complements versus substitutes and trends in fertility choice in dynastic models demographers emphasize decreased mortality and economic development as the main contributors generating the demographic transition contrary to previous findings we show that simple dynastic models a la barro becker can reproduce observed changes in fertility in response to decreased mortality and increased productivity growth if the intertemporal elasticity of substitution is low enough we show that this is largely due to number and welfare of children being substitutes in the utility of parents in this case we find that with an ies of one third model predictions of changes in fertility amount to two thirds of those observed in u s data since 1800 between 1800 and 2000 fertility choice in the united states underwent a dramatic transition depending on estimates it fell from about six children per woman to around two children per woman this demographic transition from a state of high fertility and high mortality to low fertility and low mortality has been documented by demographers and historians in the united states and in every other developed country in the world over this same period natural rates of population growth net of immigration also fell but less substantially demographers have not reached a consensus on the root causes of this transformation but list several changes as likely main contributors these include reductions in infant and child mortality rates imrs and cmrs and the process of industrialization and economic development the work in demography and history on this topic has largely been limited to empirical studies with almost no choice based modeling of the type seen in economics even there issues of the timing of changes