Monetary Policy, Housing and Inequality

Research on the effects of monetary policy is increasingly focusing on areas outside the classic suspects of interest, output and inflation. Especially since the more frequent use of unconventional monetary policy instruments such as large-scale asset purchases, there have been discussions about adverse effects of this unprecedented market interventions on specific markets such as housing markets as well as on inequality. Does monetary policy affect households on certain parts of the wealth distribution more than others? This note emphasizes the channels through which monetary policy influences housing markets and inequality, their interplay, and how these topics are not only “innocent bystanders” (Coibion et al., 2017) of monetary policy but also shape how monetary policy is transmitted to the economy.