The effects of an expansionary monetary policy during economic slumps should be counterbalanced by the opposite effects of a tight monetary policy during booms. It may of course be reasonable to take as a starting point that monetary policy is neutral in the long run. But there are factors that may point to a need to modulate this starting point. Some research results indicate that the effects of expansionary and contractionary monetary policy are not necessarily symmetrical.4 There are also mechanisms that make the risk of staying unemployed increase the longer one is unemployed. Add to this that the income profile over the life cycle improves considerably if one has a job. This could mean that there are motives for conducting a relatively more offensive monetary policy in economic recessions. But here more research is needed to gain a deeper insight into the causes and scope of this type of persistence effects on unemployment and what these effects mean for monetary policy. Monetary policy affects incomes from different sources The effects of monetary policy on income and wealth distribution are in other words rather difficult to disentangle. But let us look at some different ways in which the expansionary monetary policy conducted in recent years may have affected the income distribution. An appropriate starting point could be the functional income distribution of GDP. As we know, GDP can be measured from different sides, for instance as the total of all factor income.
Debt-to-income ratio in different income groups 2016 Percentage of disposable income 400  400  350  350  300  300  250  250  200  200  150  150  100  100  50  50  0  0  1  2  3  4  5  6  7  8  9  10  Note. The columns show the median in each decile group. Data for July 2016. The high debt ratio in the lowest income group should be interpreted with a certain amount of caution, as this group includes, among others, households with highly varied incomes, for example households with negative income. Source: The Riksbank  In addition to households having different sizes of assets and liabilities that are affected by interest rates to different degrees, there may also be other dimensions that play a role in how the distribution of income and wealth is affected by a period of very expansionary monetary policy. For instance, one can imagine that household that are used to managing their assets and liabilities have better conditions for safeguarding themselves against or benefitting from the effects of monetary policy on interest rates and asset prices. However, the distributional effects of monetary policy do not come solely through changes in nominal interest rates and asset prices. Ultimately, it is the effect when consideration is given to inflation that is important. And the composition of household wealth is also significant in this context.