LATEST PUBLICATIONS
NEDA 7 COVID-19 RRP 2020-2022
Central Visayas COVID-19 Regional Recovery Program 2020-2022
NEDA 7 RDP 2017-2022 Midterm
Central Visayas Regional Development Plan 2017-2022 Midterm Update
NEDA 7 RDRA 2017-2022
Central Visayas Regional Development Research Agenda 2017-2022
NEDA 7 RDR 2019
Central Visayas Regional Development Report 2019

LATEST AV MATERIALS
PIDS WB 2021-1201
Analyzing the President's Budget for 2022
GIZ-FFS-2020-01
WASHaLOT 3.0: Production Process
GIZ-FFS-2021-03
WASHaLOT 3.0 Mass Production
GIZ-FFS-2021-02
Minimum Requirement Guidelines on WASH in Schools
Publication Detail
BSP WPS 2020-09: Distributional Impact of Monetary Policy: Evidence from The Philippines

With the advent of unconventional policies implemented by the central banks in advanced economies, a resurgence of interest in the role of monetary policy in driving inequality has ensued. This research mainly focused on examining how the variations in the Bangko Sentral ng Pilipinas' policy rate affect income across Filipino households, and consequently, income inequality. The study first employed a VAR model to check the general direction of how variation in output growth, inflation, and policy rates affect income inequality as measured by the GINI coefficient. The impulse response functions suggest that expansionary monetary policy could potentially reduce income inequality in the country. Moreover, a positive shock to output reduces inequality, while a positive shock to inflation drives higher inequality. Subsequently, the paper employed quantile regressions to characterize how variation in the BSP's policy rate affects income across income groups. The regression analyses yielded a significant impact of policy rates on income at varying magnitude across household groups. While all income groups recorded a negative association between income and policy rates, the wealthier households bear the substantial negative effects. Also, the quantile regressions highlight the negative association between inflation and total income across all household groups. In particular, the poorest households are hit the hardest following an inflationary episode. This is consistent with the paper's preliminary assessment, which noted the inequality-worsening effect of a positive shock to inflation. These results suggest that the inflation channel is an essential distributional channel of monetary policy in the Philippines, and keeping inflation within target benefits the poor the most.

Bangko Sentral ng Pilipinas
Authors Keywords
Cabote, Nickson, J.; Fernandez, Justine Ray Angelo, J.; monetary policy; income inequality; household income; inflation; developing economies;
Download PDF Number of Downloads
Published in 2020 and available for Downloaded 0 times since July 08, 2021
×
Please let us know your reason for downloading this publication. May we also ask you to provide additional information that will help us serve you better? Rest assured that your answers will not be shared with any outside parties. It will take you only two minutes to complete the survey. You will answer the profile questions only once as long as you enter the same email address. Thank you.


To use as reference:
If others, (Please specify):
Name: (optional)
Email: (required, but will not display; please use the same email address when downloading another publication so that the profile questions will not appear)
Age:
Gender:
If Prefer to self-describe, please specify:
Level of Education:
Occupation:
If employed either part-time or full-time, name of office:
If others, (Please specify):
Would you like to receive the SERP-P UPDATES e-newsletter? Yes No
Use the space below if you have any comment about this publication or SERP-P knowledge resources in general.