Analyses the effect of monetary policy transmission on the inequality in OECD countries

• Main Authors: Farajnezhad, M., Ramakrishnan, S. A. L., Zadeh, M. S. K.
• Format: Article
• Published: Dorma Journals 2020
• Subjects: HG Finance
• Online Access: http://eprints.utm.my/id/eprint/93198/
• Institution: Universiti Teknologi Malaysia

The aim of this article is to analyze the inequality impacts of monetary policy transmission in OECD countries’ economy from 2001 to 2017. Panel regression model has been applied for the hypotheses test. Information gathering has been based on the country' s basic information, i.e the data required for research are generally derived from the library method, using the World Bank website. The econometric method used in this research, is Generalized Torque Method. Dependent variable Gini coefficient index is considered as an indicator of income inequality and independent variables of monetary transfer mechanisms include interest rates, liquidity, exchange rates, the gold price, the legal reserves of the central bank and the banks' debt to the central bank. The results show that the interest impact of monetary transfer mechanism at the Gini coefficient as an indifference index in OECD countries is positive and insignificant (probability is 0. 18) with a coefficient of 0.004 and it shows that raising interest rates will increase the inequality in these countries. Additionally, the effect of the capital market on the inequality is also positive with a coefficient of 0.001 and a significant probability of 0.002. It shows the positive effect of bank deposits on income inequality.