Essays on Monetary Policy and Income Inequality
Over the past decades, income inequality has increased for a number of reasons, attracting the focus and attention of researchers in academia and industry. Many economists and political analysts have examined this dilemma from different views and criticized the performance of monetary and fiscal policies in being the root of this problem. The purpose of this dissertation is to examine how monetary policy affects income inequality at the global level by developed and developing countries, and also in the U.S. economy. In order to achieve this goal, this dissertation consists of three individual essays that take different points of view on this topic and use advanced methods in time series analysis. The first essay analyzes the relationship between inflation and income inequality in developed and developing countries. The second essay explores the impact of sector growth and monetary policy on income inequality in developing countries. The third essay examines the impact of monetary policy shocks on various measures of inequality for the periods before and after Quantitative Easing (QE) policy in the U.S. economy. The first essay finds a nonlinear relationship between inflation and income inequality in developed and developing countries, and Kuznets inverted ‘U-shaped’ hypothesis between real Gross Domestic Product (GDP) per capita and income inequality in developing countries. The second essay shows a dominant negative effect of agricultural and industrial growth and positive effect of service growth on income inequality in developing countries. Kuznets hypothesis is tested in different economic sectors. The third essay shows a negative and positive effect of expansionary monetary policy shocks on various measures of inequality for the period before and after QE policy, respectively, in the U.S. economy.
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