Must-read: Amir Sufi: “Household Debt, Redistribution, and Monetary policy during the Economic Slump”

Must-Read: Amir Sufi: Household Debt, Redistribution, and Monetary policy during the Economic Slump: “High-income and low-income individuals respond very differently to monetary policy shocks…

…as do savers and borrowers. Monetary policy has been especially weak in advanced economies over the past seven years because the redistribution channels of monetary policy have been severely hampered. Recognising the importance of such channels can guide central bankers on what monetary policies are most likely to be effective: the same policy may have different effects on the real economy depending on the distribution of debt capacity across individuals.