Quantitative Easing Policy and Income Inequality in the U.S. Economy: Evidence from a FAVAR Model

The aim of this paper is to analyze the impact monetary base shocks on different measures inequality in U.S. economy for periods before and after implementation quantitative easing (QE) policy. In order take additional information into account, Factor-Augmented Vector Autoregressive (FAVAR) model built used estimation. To extract component factors, Principal Component Analysis (PCA) method applied data 115 series monthly period January 1997 September 2018. Impulse Response Function (IRFs) results FAVAR models show that expansionary policy does not affect QE short run, but there a long-run relationship between them two periods. also are no signs “price puzzle” nor “liquidity or “exchange rate implementation.