Monetary Policy with Racial Inequality. Nakajima, M. December 2021. Unpublished manuscript![Monetary Policy with Racial Inequality [link]](https://bibbase.org/img/filetypes/link.svg "link")
Link abstract bibtex 4 downloads This paper presents a heterogeneous-agent New-Keynesian model featuring racial inequality in terms of income, wealth, and labor market risks, and studies how monetary policy affects different racial groups differently. The calibrated model can replicate the fact that an accommodative monetary policy shock narrows the Black-White unemployment rate gap, as the higher job separation rate among Black workers make the value of their job more sensitive to a monetary policy shock. The model indicates that Black and Hispanic workers benefit more from accommodative monetary policy than White workers, since they are more likely to be liquidity constrained and thus hand-to-mouth, and they face higher labor market risks, which are mitigated by accommodative monetary policy. For example, average welfare gain of Black workers from an accommodative monetary policy shock is more than 20 times larger than that of (middle-class) White workers.
@unpublished{Nakajima2021,
title = {Monetary Policy with Racial Inequality},
author = {Nakajima, Makoto},
year = {2021},
month = dec,
url = {https://makotonakajima.github.io/wp/},
urldate = {2022-02-23},
abstract = {This paper presents a heterogeneous-agent New-Keynesian model featuring racial inequality in terms of income, wealth, and labor market risks, and studies how monetary policy affects different racial groups differently. The calibrated model can replicate the fact that an accommodative monetary policy shock narrows the Black-White unemployment rate gap, as the higher job separation rate among Black workers make the value of their job more sensitive to a monetary policy shock. The model indicates that Black and Hispanic workers benefit more from accommodative monetary policy than White workers, since they are more likely to be liquidity constrained and thus hand-to-mouth, and they face higher labor market risks, which are mitigated by accommodative monetary policy. For example, average welfare gain of Black workers from an accommodative monetary policy shock is more than 20 times larger than that of (middle-class) White workers.},
keywords = {Impacts of Wealth Inequality},
note = {Unpublished manuscript}
}
Downloads: 4
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