signs are conflicting, and conclusions accordingly hard to draw. clearly if we move further towards the “ general equilibrium ” view that i advocated earlier, the complexity only increases. as figure 9 shows, european equity markets too have displayed widely divergent patterns over the last few years. in italy and austria prices are hovering around their levels of five years ago, while the german and dutch markets have rebounded and are now 25 to 50 per cent higher than in 2010. as we know, national labour market dynamics have also differed greatly. this heterogeneity reflects a number of structural and cyclical factors, but it probably also depends on asymmetries in the transmission of monetary policy. in conclusion, as soon as we move beyond the initial, naive borrowers - versus - savers dichotomy we find that identifying the “ winners ” in the euro area becomes an extremely difficult task. 4. two good reasons for central banks to care about inequality, and an excellent one to study it : it shapes the transmission mechanism given how little we know about the distributional implications of monetary policy, central banks should certainly not think of attenuating inequality as an additional implicit policy objective. but this does not mean that they can – or should – simply ignore the issue. there are at least three reasons why, on the contrary, we must take it seriously. first of all, a central bank that fails to take the redistributional effects of its decisions into account will also be missing some aspects of the transmission mechanism, and may be less effective in pursuing its macroeconomic and financial stability objectives. we ordinarily assume that the transmission of monetary policy to the real economy relies on two mechanisms : nominal rigidities ( by changing nominal interest rates the central bank is able to affect real interest rates and real wages ) and intertemporal substitution ( a fall in real rates increases aggregate demand by stimulating consumption and investment ). these may indeed play a central role in a representative - agent world, but thinking in terms of representative agents is not sufficient. in reality, there are many forms of heterogeneity among households that can have a strong influence on the transmission mechanism. one is the distribution of housing and mortgage debt in the population. households with mortgages to pay appear to adjust their consumption significantly after an unexpected change in interest rates, whereas renters and outright home - owners are far less sensitive. 21 another one is demographics. by increasing inflation, an expansionary monetary shock reduces the real value of

labour earnings at the bottom of the income distribution may be relatively more sensitive to the business cycle ; 14 if this is the case, successful countercyclical mp might help low - income households above all, attenuating inequality. this suggests that monetary expansions could well decrease – not increase – inequality. this brief discussion suggests the considerable difficulty of determining the net distributional effect of a monetary policy intervention a priori. to me, this is primarily an empirical issue, in which the conclusion depends on a series of economic and institutional characteristics. and i think the difficulty stems mainly from the fact that it involves many dimensions that need to be considered jointly. since monetary policy works through both income and wealth channels, at the very least one should examine their distribution in the population jointly and not singly. figure 5 reports data on the ratio of debt service to income ( ds - i ) in the euro area from the household finance and consumption survey ( hfcs ), plotting on the vertical axis the fraction of households whose ds - i ratio exceeds the level shown on the horizontal axis. to distinguish the relatively poor from the rich, there is a separate curve for each gross income quintile. low - income households clearly bear a much heavier burden of debt than their high - income counterparts. in the bottom quintile ( yellow line ), roughly four tenths face monthly debt payments of 40 per bindseil et al. ( 2015 ). the exception is households in the lowest quintile, for which transfers are more important. heathcote et al. ( 2010 ). bis central bankers ’ speeches cent or more of gross income. this fraction drops to less than two tenths in the second income quintile ( solid blue line ), and is practically nil for the top quintile ( dashed blue line ). this ordering basically holds for pretty much all ds - i values. furthermore, the curve for the bottom quintile is set sharply apart from the others : servicing debt, that is, is only a problem, practically, for the poorest group of households. this empirical regularity suggests that the anti - qe camp has put forward arguments that are not fully consistent with one another. criticising qe at the same time for “ hurting savers ” ( like the first set of quotations above ) and for “ helping the rich ” 15 becomes problematic if in reality these turn out to be two largely overlapping categories. in conclusion, it seems fair to say that our