Monetary policy and inequality : Cash-in-advance model with limited participation
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This study is to examine the dynamic properties of relationship between inequality and monetary policy. A tractable theoretical model for analysis is designed on the basis of the concept of the cash-in-advance model. The implication of this model suggests that an increase in money supply could result in a rise in inequality. However, empirical analysis shows that the effect of the money supply is negative, but the coefficient value is not significant enough to conclude with the same meaning as the theoretical system. Perhaps it is not possible to interpret the estimated coefficients since there is no clear theoretical basis. Therefore, in order to clarify the mechanism between monetary policy and inequality, it is necessary to establish the theoretical framework first of all, and more extensive data review is necessary for the empirical analysis.
Abstract
This study is to examine the dynamic properties of relationship between inequality and monetary policy. A tractable theoretical model for analysis is designed on the basis of the concept of the cash-in-advance model. The implication of this model suggests that an increase in money supply could result in a rise in inequality. However, empirical analysis shows that the effect of the money supply is negative, but the coefficient value is not significant enough to conclude with the same meaning as the theoretical system. Perhaps it is not possible to interpret the estimated coefficients since there is no clear theoretical basis. Therefore, in order to clarify the mechanism between monetary policy and inequality, it is necessary to establish the theoretical framework first of all, and more extensive data review is necessary for the empirical analysis.
참고문헌 (5)
- Alvarez, F., "Interest rates and inflation", The American Economic Review, 91(2), pp.219~225 (2001)
- Bianconi, M., "Monetary growth volatility and asset prices in a two-country cash-in-advance model", Journal of Economic Integration, 7(1), pp.80~101 (1992)
- Davidson, R., "Econometric theory and methods" (2004), Oxford university press
- Kim, H. B., "Financial repression and financial liberalization in a small open economy: A cash-in-advance approach", Seoul Journal of Economics, 13(4), pp.421~457 (2000)
- Romer, C. D., "Monetary policy and the well-being of the poor", Economic Reiveiw, 84(1), pp.21~49 (1999)