Does Quantitative Easing Affect Income Inequality? A Panel Data Study

Abstract

In this essay, we examine the effect that quantitative easing has on Gini coefficients. This was done via quantitative data analysis through two different statistical methods, Ordinary Least Squares and Panel Data regression analysis using Fixed Effects. The panel data set consists of 12 countries between the years 2000 and 2014, with annually collected data for seven variables. Our results show that quantitative easing has a negative statistically significant relationship to Gini coefficients, which suggests that using this unconventional monetary policy reduces Gini coefficients and consequently income inequality. Beyond this, we attempt to shed some light on the distributional channels through which monetary policy affects income inequality and tie that together to our data set.