Monetary Policy Transmission to Consumption: Inequalities by Gender and Race

Join us Thursday, December 4 at 5 PM for a discussion at Blithewood with Professor Aina Puig.

This discussion explores a paper estimating the causal effects of monetary policy shocks on household consumption, with additional analysis of labor market and income responses, disaggregated by gender and race. Puig finds that contractionary monetary policy reduces consumption more for black than white households, with the largest declines among households headed by black women. These gaps persist after accounting for differences in household education, debt, and income, but are partly explained by differences in marital status and spousal insurance against shocks. These shocks also lead households to shift expenditures from non-essential and durable goods toward essential non-durable goods and services. The analysis provides estimates of marginal propensities to consume across groups and shows that contractionary, rather than expansionary, shocks drive aggregate consumption responses. These findings highlight the importance of accounting for intersectional demographic heterogeneity in evaluating the distributional effects of monetary policy.

Aina Puig is a Clinical Assistant Professor of Economics at Pace University. She is an applied macroeconomist, researching monetary economics, consumer finance, and inequality topics. She has worked on projects studying the distributional effects of monetary policy while visiting Federal Reserve Banks and the International Monetary Fund. She received her PhD in Economics from American University and her BS in Economics from the University of Maryland, College Park.