Tuesday, June 7th, 2016 11:48 am

Inequality and Monetary Policy

The ratio of the 90th to the 10th percentile of the US income distribution has been unaffected by the Federal Reserve's unconventional monetary policies since the financial crisis.

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel
Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Agree 6
Perhaps top 1% share (especially in wealth). Because of the induced stock market boom, but this is uncertain. Certainly not 90-10.
Bio/Vote History
         
Alesina Alberto Alesina Harvard Did Not Answer
Bio/Vote History
         
Altonji Joseph Altonji Yale Uncertain 3
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Uncertain 3
Bio/Vote History
         
Autor David Autor MIT No Opinion
Bio/Vote History
         
Baicker Katherine Baicker Harvard Did Not Answer
Bio/Vote History
         
Banerjee Abhijit Banerjee MIT Uncertain 7
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Uncertain 4
Bio/Vote History
         
Brunnermeier Markus Brunnermeier Princeton Disagree 8
Monetary policy affects asset prices -> redistributes wealth (if assets not held symmetrically).See e.g. "Redistribute monetary policy" 2012
Bio/Vote History
         
Chetty Raj Chetty Stanford Disagree 5
Bio/Vote History
         
Chevalier Judith Chevalier Yale Disagree 6
There are likely distributional effects but unpacking the full extent of them is a continuing area of research. I attach one useful survey.
-see background information here
Bio/Vote History
         
Cutler David Cutler Harvard Did Not Answer
Bio/Vote History
         
Deaton Angus Deaton Princeton Disagree 5
How could it not have? No idea how much, but why would the distribution of income be invariant to such a thing?
Bio/Vote History
         
Duffie Darrell Duffie Stanford Strongly Agree 1
A lot of low to mid income workers would have had no jobs absent the Fed's policy. This is a first order impact on the 90-10 income spread.
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Did Not Answer
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Disagree 5
Monetary policy has distributional effects; it should however not be made on that basis.
Bio/Vote History
         
Einav Liran Einav Stanford No Opinion
Bio/Vote History
         
Fair Ray Fair Yale Disagree 5
Bio/Vote History
         
Finkelstein Amy Finkelstein MIT Did Not Answer
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Did Not Answer
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Uncertain 1
compared to what? if the fed hadn't cut rates to 0+QE, the recession would have been deeper and that would have made inequality even worse
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Uncertain 2
easy to tell stories of an effect and stories of no effect-- i'm unaware of meaningful evidence.
Bio/Vote History
         
Hall Robert Hall Stanford Agree 7
That policy had essentially no macro effects considering effects on long-term bonds and those of funding with reserves at above-market rates
Bio/Vote History
         
Hart Oliver Hart Harvard Uncertain 5
Quantitative easing has boosted asset prices, reduced interest rates and lowered unemployment. The overall effect on inequality is unclear.
Bio/Vote History
         
Holmström Bengt Holmström MIT Uncertain 3
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Uncertain 6
The 90th percentile is below the wealth level most affected so the answer is not obvious.
Bio/Vote History
         
Hoynes Hilary Hoynes Berkeley Uncertain 4
Bio/Vote History
         
Judd Kenneth Judd Stanford Disagree 8
"Income" includes capital gains. The low interest rates have surely contributed to the substantial capital gains that accrued to the rich.
Bio/Vote History
         
Kaplan Steven Kaplan Chicago Agree 8
Technology, globalization and regulation are much bigger contributors.
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Agree 7
Probably helped the bottom a bit, but monetary policy would be way, way down on the list of factors affecting inequality.
Bio/Vote History
         
Klenow Pete Klenow Stanford Agree 4
Agree with some caveats.
-see background information here
Bio/Vote History
         
Levin Jonathan Levin Stanford Did Not Answer
Bio/Vote History
         
Maskin Eric Maskin Harvard Uncertain 5
Fed policy probably helped stock market investors, but it also probably helped employment. Unclear which effect was stronger.
Bio/Vote History
         
Nordhaus William Nordhaus Yale Disagree 4
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Uncertain 5
Bio/Vote History
         
Samuelson Larry Samuelson Yale Uncertain 1
Fed policy may have had an effect, but this is swamped by the effects of other government policies and structural changes in the economy.
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Uncertain 4
Distribution effects of monetary policy are difficult to determine.
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Agree 3
Bio/Vote History
         
Shapiro Carl Shapiro Berkeley Uncertain 3
Bio/Vote History
         
Shimer Robert Shimer Chicago Uncertain 4
I'm pretty sure the 90-10 income ratio has been affected, but I'm not sure in which direction and I doubt the magnitude is big.
Bio/Vote History
         
Thaler Richard Thaler Chicago Uncertain 1
How would anyone know? Must be wrong but which way?
Bio/Vote History
         
Udry Christopher Udry Yale Disagree 1
Bio/Vote History
         

10 New Economic Experts join the IGM Panel


For the past two years, our expert panelists have been informing the public about the extent to which economists agree or disagree on important public policy issues. This week, we are delighted to announce that we are expanding the IGM Economic Experts Panel to add ten new distinguished economists. Like our other experts, these new panelists have impeccable qualifications to speak on public policy matters, and their names will be familiar to other economists and the media.

To give the public a broad sense of their views on policy issues, each new expert has responded to a selection of 16 statements that our panel had previously addressed. We chose these 16 statements, which cover a wide range of important policy areas, because the original panelists' responses to them were analyzed in a paper comparing the views of our economic experts with those of the American public. You can find that paper, by Paola Sapienza and Luigi Zingales, here. The paper, along with other analyses of the experts' views, was discussed during the American Economic Association annual meetings, and the video can be found here.

The new panelists' responses to these statements can be seen on their individual voting history pages. Our ten new economic experts are:

Abhijit Banerjee (MIT)
Markus K. Brunnermeier (Princeton)
Liran Einav (Stanford)
Amy Finkelstein (MIT)
Oliver Hart (Harvard)
Hilary Hoynes (Berkeley)
Steven N. Kaplan (Chicago)
Larry Samuelson (Yale)
Carl Shapiro (Berkeley)
Robert Shimer (Chicago)


Please note that, for the 16 previous topics on which these new panelists have voted, we left the charts showing the distribution of responses unchanged. Those charts reflect the responses that our original panelists gave at the time, and we have not altered them to reflect the views of the new experts.

We have also taken this opportunity to ask our original panelists whether they would vote differently on any of the statements we have asked about in the past. Several experts chose to highlight statements to which they would currently respond differently. In such cases, you will see this "revote" below the panelist's original vote. We think you will enjoy seeing examples of statements on which some experts have reconsidered.

As with the 16 previous statements voted on by new panelists, these "revote" responses are not reflected in the chart that we display showing the distribution of views for that topic: all the charts for previous questions reflect the distribution of views that the experts expressed when the statement was originally posed.

About the IGM Economic Experts Panel

This panel explores the extent to which economists agree or disagree on major public policy issues. To assess such beliefs we assembled this panel of expert economists. Statistics teaches that a sample of (say) 40 opinions will be adequate to reflect a broader population if the sample is representative of that population.

To that end, our panel was chosen to include distinguished experts with a keen interest in public policy from the major areas of economics, to be geographically diverse, and to include Democrats, Republicans and Independents as well as older and younger scholars. The panel members are all senior faculty at the most elite research universities in the United States. The panel includes Nobel Laureates, John Bates Clark Medalists, fellows of the Econometric society, past Presidents of both the American Economics Association and American Finance Association, past Democratic and Republican members of the President's Council of Economics, and past and current editors of the leading journals in the profession. This selection process has the advantage of not only providing a set of panelists whose names will be familiar to other economists and the media, but also delivers a group with impeccable qualifications to speak on public policy matters.

Finally, it is important to explain one aspect of our voting process. In some instances a panelist may neither agree nor disagree with a statement, and there can be two very different reasons for this. One case occurs when an economist is an expert on a topic and yet sees the evidence on the exact claim at hand as ambiguous. In such cases our panelists vote "uncertain". A second case relates to statements on topics so far removed from the economist's expertise that he or she feels unqualified to vote. In this case, our panelists vote "no opinion".

The Economic Experts Panel questions are emailed individually to the members of the panel, and each responds electronically at his or her convenience. Panelists may consult whatever resources they like before answering.

Members of the public are free to suggest questions (see link below), and the panelists suggest many themselves. Members of the IGM faculty are responsible for deciding the final version of each week’s question. We usually send a draft of the question to the panel in advance, and invite them to point out problems with the wording if they see any. In response, we typically receive a handful of suggested clarifications from individual experts. This process helps us to spot inconsistencies, and to reduce vagueness or problems of interpretation.

The panel data are copyrighted by the Initiative on Global Markets and are being analyzed for an article to appear in a leading peer-reviewed journal.

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