Is There a Role for the Monetary Policy Channel in Transmitting Positive Shocks to the Services Sector Employment Shares to Income Inequality?
Evidence reveals that unexpected increase in the services sector employment shares leads to significant increase in income inequality. In addition, the counterfactual analysis reveals that the inflation below the 4.5 or 6 % threshold dampens the increase in income inequality from positive shocks to the services sector employment shares. Moreover, the counterfactual analysis reveals that high GDP growth, the repo rate, and exchange rate channels amplify the impact of positive shocks to the services sector employment shares onto income inequality.
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