As a majority of net borrowers are in the lowest part of the income distribution, an expansionary monetary policy shock would help to narrow the income distribution.6 Third, a monetary policy shock may impact on the price of financial and real assets by affecting interest rates and expectations. The distributional consequences depend on asset ownership patterns.
In general, households in the highest percentiles of the income distribution tend to have greater financial wealth and a larger share of income derived from financial assets. If an expansionary monetary policy has positive wealth effects, it would lead to a widening of the income distribution.