TY  - JOUR
AU  - Romer,Christina D.
AU  - Romer,David H.
TI  - Monetary Policy and the Well-Being of the Poor
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6793
PY  - 1998
Y2  - November 1998
UR  - http://www.nber.org/papers/w6793
L1  - http://www.nber.org/papers/w6793.pdf
N1  - Author contact info:
Christina D. Romer
Department of Economics
University of California, Berkeley
Berkeley, CA 94720-3880
Tel: 510/642-4317
Fax: 510/642-6615
E-Mail: cromer@econ.berkeley.edu

David H. Romer
Department of Economics
University of California, Berkeley
Berkeley, CA 94720-3880
E-Mail: dromer@econ.berkeley.edu
AB  - This paper investigates monetary policy's influence on poverty and inequality in both the short run and the long run.  We find that the short-run and long-run relationships go in opposite directions.  The time-series evidence from the United States shows that a cyclical boom created by expansionary monetary policy is associated with improved conditions for the poor in the short run.  The cross-section evidence from a large sample of countries, however, shows that low inflation and stable aggregate demand growth are associated with improved well-being of the poor in the long run.  Both the short-run and long-run relationships are quantitatively large, statistically significant, and robust. But because the cyclical effects of monetary policy are inherently temporary, we conclude that monetary policy that aims at low inflation and stable aggregate demand is the most likely to permanently improve conditions for the poor.
ER  -