Title: Distributional effects of monetary policy on wealth inequality in developing Asia

Authors: Warawut Ruankham; Yuthana Sethapramote

Addresses: Sustainability and Entrepreneurship Research Center, Mae Fah Luang University, Chiang Rai, 57100, Thailand ' School of Development Economics, National Institute of Development Administration (NIDA), Bangkok, Thailand

Abstract: Building upon research primarily conducted in more advanced economies, this study broadens the investigation of the distributional effects of monetary policy and wealth inequality in developing Asia, with a specific focus on long-term cointegration between monetary policy and inequality. Utilising inequality data from the World Inequality Database during 2000-2021, we provide a comprehensive examination of the distributional effects of monetary policy on wealth inequality in nine developing countries in Asia who adopted inflation targeting monetary policy framework. Employing the Panel Vector Auto Regressive and the Auto Regressive Distributed Lag models, our findings reveal that expansionary monetary policy, characterised by lower interest rates and higher inflation, exacerbates long-term disparities in personal wealth. These results underscore the importance of central banks addressing the distributional consequences of their policies and incorporating inequality considerations into their long-term monetary objectives.

Keywords: monetary policy; distributional effect; wealth inequality; time series analysis; developing Asia; panel VAR.

DOI: 10.1504/IJMEF.2025.148852

International Journal of Monetary Economics and Finance, 2025 Vol.18 No.5, pp.376 - 393

Received: 26 Mar 2024
Accepted: 30 Jun 2025
Published online: 29 Sep 2025 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article