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Monetary Policy and Economic Inequality


  • Josefin Kilman

Summary, in English

This thesis consists of four independent empirical papers on monetary policy and economic inequality. The first paper explores the Romer and Romer (R&R) (2004) framework to estimate monetary policy shocks. R&R propose a simple method to estimate shocks using forecast and real-time data, but such data is not always available. We study the consequences of using revised outcome data when estimating policy shocks in the R&R framework, and find small impacts on actual shock estimates and the estimated effects of the shocks.

In the second paper I estimate monetary policy shocks for Sweden between 1996 and 2019, using forecasts of output and inflation in the R&R approach. I compare them to shocks estimated with a recursive vector autoregression (VAR) and a high-frequency identification (HFI) approach. The R&R and VAR shocks are similar, while the HFI shocks are fewer and smaller in size. Local projections show expected impulse responses on several economic variables but responses to the recursive VAR shocks are more in line with textbook findings.

In the third paper I use state-level data to test whether labor unions influence the impact of monetary shocks on income inequality in the United States between 1970-2008. The results show that contractionary monetary shocks increase income inequality, but the impact is weaker with a higher union density. I find that wages and employment are two channels explaining how unions mitigate the monetary policy and income inequality relationship.

The final paper explores the relationship between monetary policy and individual wealth using Swedish administrative register data for the years 2000-2007. Results suggest that contractionary monetary shocks decrease the market value of assets, yet there are weaker effects on wealth inequality. Findings indicate distributional effects of monetary shocks when individuals are ranked by net wealth, age, income and the size of the city they live in. Wealthier individuals reduce their riskier financial assets in response to a policy tightening while less wealthy individuals increase real assets.

Publishing year




Document type



Media-Tryck, Lund University, Sweden


  • Economics


  • Monetary policy
  • Monetary policy shocks
  • Vector auto-regression
  • Local projections
  • Income inequality
  • Wealth inequality
  • Labor unions
  • Administrative register data
  • Savings
  • Macroeconomic policy




  • ISBN: 978-91-8039-380-5
  • ISBN: 978-91-8039-379-9

Defence date

25 November 2022

Defence time


Defence place



  • Svend E. Hougaard Jensen (Professor)