Report
Patrick Artus

Is higher wealth inequality an acceptable trade-off for lower income inequality?

Monetary policies in the United States and the euro zone are undergoing considerable change. The shift to “average inflation targeting” allows central banks to keep monetary policy expansionary throughout the growth period, i.e. to implement a policy that overheat s the economy . The appeal of this new monetary policy strategy is that it makes it possible to drive up the employment rate and therefore to reduce income inequality. But its downside is that it leads to abnormal rises in asset prices and, as a result, to increased wealth inequality. So is higher wealth inequality an acceptable trade-off for lower income inequality? To avoid this, one solution is to tax the capital gains that result from the highly expansionary monetary policies and their effect on share prices, real estate prices, etc. This is indeed the policy now being conducted in the United States: overheating policy (fiscal deficits, expansionary monetary policy) while tax on capital gains is being increased to prevent an excessive rise in wealth inequality.
Provider
Natixis
Natixis

Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.

 

Analysts
Patrick Artus

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Alicia Garcia Herrero
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