<abstract xmlns="http://www.w3.org/1999/xhtml">
<p>This paper illustrates a case where an increase of the interest  rates  improves  the  economic  activity  and  reduces  income inequality. This theoretical exercise deals with a simple model of disequilibrium with accountant identities of budget constraints. In addition, and following previous models, the effect of the COVID-19 shock is considered, by reflecting asymmetric repercussions that increase income inequality. A simple empirical exercise confirms some of the previous results. The proposed explanation is that, for the euro area, this shock has affected more middle-income households such as the retailers harmed by the compulsory lockdown who have increased their debts.</p>
</abstract>

This paper illustrates a case where an increase of the interest  rates  improves  the  economic  activity  and  reduces  income inequality. This theoretical exercise deals with a simple model of disequilibrium with accountant identities of budget constraints. In addition, and following previous models, the effect of the COVID-19 shock is considered, by reflecting asymmetric repercussions that increase income inequality. A simple empirical exercise confirms some of the previous results. The proposed explanation is that, for the euro area, this shock has affected more middle-income households such as the retailers harmed by the compulsory lockdown who have increased their debts.

Raising Interest Rates for Improving Income

Department of Economic Analysis and IEDIS

Journal of Central Banking Theory and Practice

This work is licensed under the Creative Commons Attribution 4.0 International License.

{"article-title":"Raising Interest Rates for Improving Income"}

This paper illustrates a case where an increase of the interest  rates  improves  the  economic  activity  and  reduces  income inequality. This theoretical...

Raising Interest Rates for Improving Income

Publicado en línea: 05 sept 2023

Páginas: 199 - 217

Recibido: 15 jun 2022

Aceptado: 23 feb 2023

DOI: https://doi.org/10.2478/jcbtp-2023-0031

Palabras clave
Monetary policy, Income inequality, Financial sector, Black Swan, COVID-19, Unemployment

© 2023 Guillermo Peña, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Raising Interest Rates for Improving Income

Publicado en línea: 05 sept 2023

Páginas: 199 - 217

Recibido: 15 jun 2022

Aceptado: 23 feb 2023

DOI: https://doi.org/10.2478/jcbtp-2023-0031

Palabras claveMonetary policy, Income inequality, Financial sector, Black Swan, COVID-19, Unemployment

© 2023 Guillermo Peña, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Palabras clave
Monetary policy, Income inequality, Financial sector, Black Swan, COVID-19, Unemployment