RT Journal Article
T1 Monetary policy and inequality under labor market frictions and capital-skill complementarity
A1 Pappa, Evi
A1 Dolado, Juan José
A1 Motyovszki, Gergo
AB We  provide  a  new  channel  through  which  monetary  policy  has  distributional consequences at business cycle frequencies.  We show that an unexpected monetary easing increases labor income inequality between high-skilled and    less-skilled workers.  To rationalize these f indings, we build a New Keynesian DSGE model with asymmetric search-and-matching  (SAM)  frictions and    capital-skill complementarity  (CSC)  in  production.  We  show  that  CSC  on its  own  introduces a dynamic demand amplification mechanism: the increase in high-skilled employment after a monetary expansion makes complementary capital more productive,  encouraging a further rise in investment demand and creating a multiplier effect. SAM asymmetries magnify this channel.
PB American Economic Association
SN 1945-7707
YR 2021
FD 2021-04-02
LK https://hdl.handle.net/10016/34784
UL https://hdl.handle.net/10016/34784
LA eng
NO We gratefully acknowledge financial support fromthe EUI (research grant IE-54) and the Spanish Ministerio de Economía y Competitividad (grant ECO2016-78652).
DS e-Archivo
RD 15 sept. 2024