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    Impact of Quantitative Easing and Tax Policy on Income Inequality: Evidence from Japan

    Yoshino, Naoyuki; Taghizadeh-Hesary, Farhad; Shimizu, Sayoko | November 2018
    Abstract
    From April 2013 until May 2016, Japan’s monetary base rose from ¥155 trillion to ¥387 trillion as part of the Bank of Japan’s (BOJ) quantitative and qualitative easing (QQE) monetary policy for achieving a price stability target of 2%. Although the main objective of the BOJ’s quantitative easing (QE) and QQE policy is inflation targeting, this paper aims to shed light on the impact of the policy on income inequality. At the same time, this paper assesses the impact of Japanese tax policy on income inequality through the development of a vector error correction model for the period Q1 2002–Q4 2016 by including the five variables of income inequality, money stock, government income tax, the stock price index, and real gross domestic product. The empirical results reveal that the QE and QQE monetary policy of the Bank of Japan increased income inequality through a rise in the price of financial assets that benefited only richer income groups and resulted in a widening of the income gaps between different income groups. On the other hand, tax policy mitigated part of the adverse effect. The results indicate that monetary policy has both a short-run impact and long-run impact on income inequality, while tax policy has only long-run impact.
    Citation
    Yoshino, Naoyuki; Taghizadeh-Hesary, Farhad; Shimizu, Sayoko. 2018. Impact of Quantitative Easing and Tax Policy on Income Inequality: Evidence from Japan. © Asian Development Bank Institute. http://hdl.handle.net/11540/9361.
    Keywords
    Urban Development Finance
    Trade Finance
    Small Business Finance
    Rural Finance
    Roundtable on International Trade and Finance
    Regional Development Finance
    Public Service Finance
    Public Finance
    Project Finance
    Private Finance
    Nonbank Financing
    Non-Bank Financial Institutions
    Municipal Finance
    Local Government Finance
    Local Currency Financing
    Limited Resource Financing
    International Financial Institutions
    Infrastructure Financing
    Industrial Finance
    Government Financial Institutions
    Government Finance
    Financing of Infrastructure
    Financial Sector Development
    Financial Regulation
    Alleviating Poverty
    Anti-Poverty
    Extreme Poverty
    Fight Against Poverty
    Global Poverty
    Health Aspects Of Poverty
    Indicators Of Poverty
    Participatory Poverty Assessment
    Poverty Eradication
    Poverty Analysis
    Poverty In Developing Countries
    Poverty Reduction Efforts
    Urban Poverty
    Taxation
    Public Accounting
    National Budget
    Municipal Bonds
    Local Government
    Local Taxes
    International Monetary Relations
    International Financial Market
    International Banking
    Central Banks
    Business Financing
    Capital Resources
    Budgetary Policy
    Capital Needs
    Corporate Divestiture
    Capital Instruments
    Pension Funds
    Insurance Companies
    Banks
    Portfolio Management
    Development Indicators
    Environmental Indicators
    Economic Indicators
    Educational Indicators
    Demographic Indicators
    Health Indicators
    Disadvantaged Groups
    Low Income Groups
    Socially Disadvantaged Children
    Rural Conditions
    Rural Development
    Social Conditions
    Urban Development
    Urban Sociology
    Grants
    Loans
    Use tax
    Taxing power
    State of taxation
    Tax-sales
    Tax revenue estimating
    Tax planning
    Spendings tax
    Special assessments
    Tax administration and procedure
    Sales tax
    Real property and taxation
    Progressive taxation
    Effect of taxation on land use
    Effect of taxation on labor supply
    Intergovernmental tax relations
    Inheritance and transfer tax
    Energy tax
    Investment of public funds
    Intergovernmental fiscal relations
    Social infrastructure
    Public works
    Government lending
    Poor
    Economic forecasting
    Health expectancy
    Social groups
    Political
    Distribution of income
    Inequality of income participation
    Distribution of income
    Inequality of income
    Developing countries
    Rural community development
    Mass society
    Social change
    Social policy
    Social stability
    Population
    Sustainable development
    Peasantry
    Urban policy
    Urban renewal
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    Citable URI
    http://hdl.handle.net/11540/9361
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    Author
    Yoshino, Naoyuki
    Taghizadeh-Hesary, Farhad
    Shimizu, Sayoko
    Theme
    Finance
    Poverty
    Labor Migration
     
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise