Raising Interest Rates for Improving Income

Peña, Guillermo (Universidad de Zaragoza)

Resumen: 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.

Idioma: Inglés

DOI: 10.2478/jcbtp-2023-0031

Año: 2023

Publicado en: Journal of Central Banking Theory and Practice 12, 3 (2023), 199-217
ISSN: 1800-9581

Factor impacto CITESCORE: 2.8 - Economics, Econometrics and Finance (all) (Q2)

Factor impacto SCIMAGO: 0.416 - Economics, Econometrics and Finance (miscellaneous) (Q2)

Financiación: info:eu-repo/grantAgreement/ES/DGA/S23-20R
Financiación: info:eu-repo/grantAgreement/ES/DGA/S39-23R
Financiación: info:eu-repo/grantAgreement/ES/MICINN/PID2020-112773GB-I00
Financiación: info:eu-repo/grantAgreement/ES/UZ/JIUZ-2022-CSJ-19

Tipo y forma: Article (Published version)

Área (Departamento): Área Fund. Análisis Económico (Dpto. Análisis Económico)