Raising interest rates also increases inequality
Montecino and Epstein 17 – Department of Economics, UMass Amherst; Department of Economics and Political Economy Research Institute (PERI), UMass Amherst
Juan Antonio Montecino and Gerald Epstein, “Did Quantitative Easing Increase Income Inequality?” Publisher, 4-24-17, https://www.cepweb.org/wp-content/uploads/2017/11/Montecino-paper.pdf
Finally, while our results tend to support the critics who argue that QE did increase inequality, there is nothing in our analysis which supports those who argue that raising interest rates will have a desirable, equalizing impact. Tighter monetary policy would likely reduce employment growth, and make mortgage refinancing more expensive. While it might reduce asset price growth and raise returns on short term assets, the employment and refinancing impacts are likely to be dominant as earlier work on monetary policy and income distribution has demonstrated (e.g. Coibion et al., 2012).