Mehdi El Herradi*, Kevin Genna**
Anushka Chawla: anushka.chawla[at]univ-amu.fr
Kenza Elass: kenza.elass[at]univ-amu.fr
Carolina Ulloa Suarez: carolina.ulloa-suarez[at]univ-amu.fr
*This paper examines the distributional effects of monetary policy in 12 OECD economies between 1920 and 2016. We exploit the implications of the macroeconomic policy trilemma with an external instrument approach to analyse how top income shares respond to monetary policy shocks. The results indicate that monetary tightening strongly decreases the share of national income held by the top one percent and vice versa for a monetary expansion, irrespective of the position of the economy. This effect (i) holds for the top percentile and the ultra-rich (top 0.1% and 0.01% income shares), while (ii) it does not necessarily induce a decrease in income inequality when considering the entire income distribution. Our findings also suggest that the effect of monetary policy on top income shares is likely to be channeled via real asset returns.
**Energy power plants have an unusually long lifetime. This characteristic might well be one of the reasons behind the slow transition from fossil to renewable energy. I introduce this specific feature through investment-specific capital accumulation à la Krusell (1998) into a multi-sector exogenous growth model with climate economics. I find that: (i) there are investment frictions due to already engaged fossil energies, (ii) the carbon tax needs to be set at 5\% of the capital rent in the "dirty'' sector in 2010, and to be increasing over time, (iii) the economy is augmenting its fossil energy stock until 2070 and (iv) clean energy reaches 50\% of total energy production in 2060. Theoretical results are sensitive to the rate of technological progress, making it essential even in presence of inertia. To investigate empirically its role in driving these results, I estimate VECM and bayesian VAR with stochastic search variable selection (SSVS) using US quarterly data from 1976 to 2019. The findings suggest that research toward renewable energy is the best option to increase its share in energy production but may have a negative impact on GDP growth.