Guest Features Research Papers

Monetary Policy, Portfolio Heterogeneity, and the College Wealth Gap



This paper investigates the relationship between monetary policy and wealth inequality by college education. I first highlight the extent to which college education drives salient differences in the portfolio composition of U.S. households, and then study how this, in turn, affects households’ exposure to asset price changes following an expansionary monetary shock. This paper contributes to an evolving body of literature exploring the role of portfolio choices and, in particular, stock market participation, on the distribution of capital gains following policy shocks. I show that accommodative monetary policy substantially exacerbates the existing wealth gap between college-educated households and households without a college degree. Monetary policy is thus limited, as it cannot stimulate economic activity without widening wealth inequality. 

Keywords: Monetary Policy, Wealth Inequality, Education, Portfolio Effects

How to Cite: Guarnieri, A. (2022) “Monetary Policy, Portfolio Heterogeneity, and the College Wealth Gap”, UCL Journal of Economics. 1(1). doi: