Impact of Monetary Policy on the Level of Economic Inequality in the United States

Abstract: After the reform of the world monetary system in 1971, the competition between countries for the global market is taking place in completely new conditions. Monetary and fiscal authorities have accumulated vast experience in regulating the economy and strengthening country competitive adva...

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Autor principal:	M. L. Dorofeev
Formato:	article
Lenguaje:	EN RU
Publicado:	MGIMO University Press 2020
Materias:	wealth inequality, economic inequality, monetary policy, taxes, interest rates, monetary policy, government regulation International relations JZ2-6530
Acceso en línea:	https://doaj.org/article/2b43d9b96aaa40219e7c80e707c8ed18
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spelling	oai:doaj.org-article:2b43d9b96aaa40219e7c80e707c8ed182021-11-23T14:50:42ZImpact of Monetary Policy on the Level of Economic Inequality in the United States2071-81602541-909910.24833/2071-8160-2020-5-74-97-114https://doaj.org/article/2b43d9b96aaa40219e7c80e707c8ed182020-11-01T00:00:00Zhttps://www.vestnik.mgimo.ru/jour/article/view/1853https://doaj.org/toc/2071-8160https://doaj.org/toc/2541-9099Abstract: After the reform of the world monetary system in 1971, the competition between countries for the global market is taking place in completely new conditions. Monetary and fiscal authorities have accumulated vast experience in regulating the economy and strengthening country competitive advantages through complex mechanisms of quantitative easing, foreign exchange rates manipulation, increasing debts, etc. Overcoming the consequences of the financial crises of the 21st century every time forces monetary regulators to implement increasingly radical measures in order to save the economy by injecting enormous amounts of liquidity into the market to buy out bad corporate debts as well as government debt securities. At the same time, the questions of how monetary policy affects the level of economic inequality and who is its beneficiary are becoming more relevant.The article seeks to analyze the impact of changes in monetary policy parameters on wealth inequality in the United States. Given the cyclical nature of economic inequality, the main method of research was chosen as a graphical statistical analysis, since it allows to identify trends effectively and keep in focus more than 100-year picture of changes in the analyzed indicators. For a more holistic picture, the dynamics of economic wealth inequality level were compared not only with key indicators of monetary policy, but also with the dynamics of marginal tax rates in US.One conclusion of the research is that wealth inequality depends more on fiscal adjustment and marginal tax rates than on monetary factors. Inadequate marginal income and inheritance tax rates are factors of rising of wealth inequality in US. Changing of monetary system settings also influences on the level of wealth inequality, because it affects the valuation of financial assets, and therefore the wealth of the richest people in US. Another important conclusion is the idea that the new monetary policy, despite all fears that it is a source of growing economic inequality, is acceptable with marginal income and inheritance tax rates of about 60% and with effective macroprudential regulation of US economy.M. L. DorofeevMGIMO University Pressarticlewealth inequality, economic inequality, monetary policy, taxes, interest rates, monetary policy, government regulationInternational relationsJZ2-6530ENRUVestnik MGIMO-Universiteta, Vol 13, Iss 5, Pp 97-114 (2020)
institution	DOAJ
collection	DOAJ
language	EN RU
topic	wealth inequality, economic inequality, monetary policy, taxes, interest rates, monetary policy, government regulation International relations JZ2-6530
spellingShingle	wealth inequality, economic inequality, monetary policy, taxes, interest rates, monetary policy, government regulation International relations JZ2-6530 M. L. Dorofeev Impact of Monetary Policy on the Level of Economic Inequality in the United States
description	Abstract: After the reform of the world monetary system in 1971, the competition between countries for the global market is taking place in completely new conditions. Monetary and fiscal authorities have accumulated vast experience in regulating the economy and strengthening country competitive advantages through complex mechanisms of quantitative easing, foreign exchange rates manipulation, increasing debts, etc. Overcoming the consequences of the financial crises of the 21st century every time forces monetary regulators to implement increasingly radical measures in order to save the economy by injecting enormous amounts of liquidity into the market to buy out bad corporate debts as well as government debt securities. At the same time, the questions of how monetary policy affects the level of economic inequality and who is its beneficiary are becoming more relevant.The article seeks to analyze the impact of changes in monetary policy parameters on wealth inequality in the United States. Given the cyclical nature of economic inequality, the main method of research was chosen as a graphical statistical analysis, since it allows to identify trends effectively and keep in focus more than 100-year picture of changes in the analyzed indicators. For a more holistic picture, the dynamics of economic wealth inequality level were compared not only with key indicators of monetary policy, but also with the dynamics of marginal tax rates in US.One conclusion of the research is that wealth inequality depends more on fiscal adjustment and marginal tax rates than on monetary factors. Inadequate marginal income and inheritance tax rates are factors of rising of wealth inequality in US. Changing of monetary system settings also influences on the level of wealth inequality, because it affects the valuation of financial assets, and therefore the wealth of the richest people in US. Another important conclusion is the idea that the new monetary policy, despite all fears that it is a source of growing economic inequality, is acceptable with marginal income and inheritance tax rates of about 60% and with effective macroprudential regulation of US economy.
format	article
author	M. L. Dorofeev
author_facet	M. L. Dorofeev
author_sort	M. L. Dorofeev
title	Impact of Monetary Policy on the Level of Economic Inequality in the United States
title_short	Impact of Monetary Policy on the Level of Economic Inequality in the United States
title_full	Impact of Monetary Policy on the Level of Economic Inequality in the United States
title_fullStr	Impact of Monetary Policy on the Level of Economic Inequality in the United States
title_full_unstemmed	Impact of Monetary Policy on the Level of Economic Inequality in the United States
title_sort	impact of monetary policy on the level of economic inequality in the united states
publisher	MGIMO University Press
publishDate	2020
url	https://doaj.org/article/2b43d9b96aaa40219e7c80e707c8ed18
work_keys_str_mv	AT mldorofeev impactofmonetarypolicyonthelevelofeconomicinequalityintheunitedstates
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Impact of Monetary Policy on the Level of Economic Inequality in the United States

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