Has monetary policy made you happier?

Staff working papers set out research in progress by our staff, with the aim of encouraging comments and debate.
Published on 10 July 2020

Staff Working Paper No. 880

Philip Bunn, Andrew G Haldane and Alice Pugh

Concerns were raised about the distributional impact of the loosening in UK monetary policy following the financial crisis. We assess the impact of this loosening on well-being using household-level data and estimated utility functions. The welfare benefits are found to have been positive, in aggregate and across most of the household distribution, relative to what otherwise would have happened. They are significantly larger than when looking at financial factors alone due to the non-financial benefits of lower unemployment and financial distress. Most people were made better-off in welfare terms from the monetary loosening, rich and poor, although the young have benefited more than the old.

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