Unveiling the Yin and Yang of expansionary monetary policy: Differential impact on inequality in China based on a national-level survey

This study explores the impact of expansionary monetary policy (EMP) on both income and wealth inequality in China using data from a national-level survey, with a particular focus on the discernible trend of wealth inequality surpassing income inequality since the beginning of the 21st century. Our findings unveil a non-uniform relationship between EMP and income inequality. While it serves to mitigate disparities between middle and low-income groups, it simultaneously exacerbates gaps between middle and high-income groups. In terms of the impact on wealth inequality, EMP exacerbates disparities by amplifying the wealth of low, middle, and high-wealth strata, with the effect escalating from lower to higher wealth groups. Moreover, this study identifies the burgeoning real estate market as the pivotal factor amplifying the policy's influence on wealth inequality. By elucidating the varied effects of EMP on income and wealth inequality, this study provides policymakers in transitioning economies with valuable insights to address inequality issues.