The effect of wage rigidity on the transmission of monetary policy to inequality
What is the effect of wage rigidities on the transmission of monetary policy to inequality? This paper investigates this question with a Two-Agent New Keynesian model with financially constrained and unconstrained households, and with search-and-matching frictions. I study the relative effects of th...
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| Format: | Working paper |
| Language: | English |
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University of Oxford
2023
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| _version_ | 1797109361911267328 |
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| author | Komatsu, M |
| author_facet | Komatsu, M |
| author_sort | Komatsu, M |
| collection | OXFORD |
| description | What is the effect of wage rigidities on the transmission of monetary policy to inequality? This paper investigates this question with a Two-Agent New Keynesian model with financially constrained and unconstrained households, and with search-and-matching frictions. I study the relative effects of the wage channel and the labour market channel in the transmission of conventional and unconventional monetary policy, and how these change with degrees of wage rigidity. My main result is that the stickier the wage, the more a contractionary monetary policy shock reduces consumption inequality, whether that is conventional monetary policy or quantitative tightening, driven by the wage channel. |
| first_indexed | 2024-03-07T07:39:16Z |
| format | Working paper |
| id | oxford-uuid:5baada8d-bbc4-4d2d-9456-03ad435b8d66 |
| institution | University of Oxford |
| language | English |
| last_indexed | 2024-03-07T07:39:16Z |
| publishDate | 2023 |
| publisher | University of Oxford |
| record_format | dspace |
| spelling | oxford-uuid:5baada8d-bbc4-4d2d-9456-03ad435b8d662023-04-18T12:00:54ZThe effect of wage rigidity on the transmission of monetary policy to inequalityWorking paperhttp://purl.org/coar/resource_type/c_8042uuid:5baada8d-bbc4-4d2d-9456-03ad435b8d66EnglishSymplectic ElementsUniversity of Oxford2023Komatsu, MWhat is the effect of wage rigidities on the transmission of monetary policy to inequality? This paper investigates this question with a Two-Agent New Keynesian model with financially constrained and unconstrained households, and with search-and-matching frictions. I study the relative effects of the wage channel and the labour market channel in the transmission of conventional and unconventional monetary policy, and how these change with degrees of wage rigidity. My main result is that the stickier the wage, the more a contractionary monetary policy shock reduces consumption inequality, whether that is conventional monetary policy or quantitative tightening, driven by the wage channel. |
| spellingShingle | Komatsu, M The effect of wage rigidity on the transmission of monetary policy to inequality |
| title | The effect of wage rigidity on the transmission of monetary policy to inequality |
| title_full | The effect of wage rigidity on the transmission of monetary policy to inequality |
| title_fullStr | The effect of wage rigidity on the transmission of monetary policy to inequality |
| title_full_unstemmed | The effect of wage rigidity on the transmission of monetary policy to inequality |
| title_short | The effect of wage rigidity on the transmission of monetary policy to inequality |
| title_sort | effect of wage rigidity on the transmission of monetary policy to inequality |
| work_keys_str_mv | AT komatsum theeffectofwagerigidityonthetransmissionofmonetarypolicytoinequality AT komatsum effectofwagerigidityonthetransmissionofmonetarypolicytoinequality |