Subject: Inflation
Subject: monetary policy
Subject: distributional effects
Year: 2020
Type: Proceeding article
Title: INCOME-SPECIFIC INFLATION RATES AND THE EFFECTS OF MONETARY POLICY: THE CASE OF NORTH MACEDONIA
Author: Jovanovic, Biljana
Author: Josimovski, Marko
Abstract: In this paper, we investigate the effects of monetary policy concerning the inflation rates specific for each income group of households. We find that the prices specific for high-income households are generally more rigid and less volatile compared to the prices specific for middle and lower-income households. This means that monetary policy can differently affect the different inflation rates specific for each of the income groups. By using a Factor-Augmented VAR (FAVAR) model, we show that a monetary policy shock affects high-income households less compared to middle and lower-income households, although the differences between the separate income groups are generally small. Then, by using a small scale gap model, we find that the prices of low-income households are the most sensitive to a monetary policy shock, while the prices of the top-income households are the least sensitive to the shock, which is in line with our empirical findings.
Publisher: Faculty of Economics-Skopje, SS. Cyril and Methodius University in Skopje
Relation: 1st international scientific conference "Economic and Business Trends Shaping the Future"
Identifier: oai:repository.ukim.mk:20.500.12188/9719
Identifier: http://hdl.handle.net/20.500.12188/9719Identifier: http://doi.org/10.47063/EBTSF.2020.0013
