• In recent years, in order to meet their price stability targets, many central banks have pursued a very expansionary policy, including low or even negative policy rates, as well as purchase programmes of securities. These policies have attracted criticism, saying they increase inequality, but I disagree. • Given the weak trend in growth in many countries, a less expansionary monetary policy than pursued during recent years would have led to higher unemployment than was the case. In that sense, monetary policy could be argued to have contributed to lower income inequalities, as unemployment could lead to large negative effects on household income. Many of those households, who would have experienced unemployment, would then have fallen to lower income deciles, contributing to higher income dispersion. Most studies that include the labour market effect come to the conclusion that the overall effect of expansionary monetary 1  See Deutsche Bundesbank (2016). 2 See Deutsche Bundesbank (2016). 2 [5]  policy on inequality is that it slightly decreases it. Or in short, the dampening effect of lower unemployment offsets the effects from higher share prices. But the overall effect seems, if any, to be small. • To sum up, the very expansionary monetary policy conducted during recent years in some countries could be argued to have had a positive net effect, albeit small, on equality. The positive employment effect normally seems to dominate over the negative effects 3. • We at the Riksbank don’t per se take equality into consideration when taking monetary policy decisions.
The decline of labour market institutions includes lower trade union membership, which reduces the relative bargaining power of labour, and more flexible labour market institutions that can pose challenges See, for example, the effects of the monetary policy pursued by the Federal Reserve in connection with the financial crises in Bivens (2015), the effects of monetary policy in the USA since 1980 in Coiboin (2016), the effects in advanced economies since 1990 in panel data-analyses in Furceri et al. (2016) and effects of the monetary policy conducted by the ECB in connection with and after the financial crises, with a focus on Germany in Bundesbank (2016). 4 One example is that a decline in trade union membership (union rate) reduces the relative bargaining power of labour, exacerbating wage inequality (Frederiksen and Poulsen 2010). Another is that more flexible labour market institutions (although positive for reallocating resources to more productive firms and enabling firm restructuring) can pose challenges for workers, especially those with low skills, and hence play an important role in explaining inequality developments (Alvadero et al 2013). 3  3 [5]  for workers with low skills. Technological progress combined with globalization seems to have played at least some role in increasing inequality within countries. • The discussion of the effects of globalization is interesting. Globalization has for long been a natural part of the Nordic economies. Our dependency on foreign trade is much higher than the global average.