Measuring the effects of unconventional monetary policy on inequality. Evidence from the implementation of “QE” in the euro area

This essay paper examines the effect of unconventional monetary policies on income inequality, in the Eurozone, taken data for conducting the research from one of the biggest economies in the world, namely Italy. In order to measure income inequality, Italy’s GINI coefficient is taken as an independent variable while the expansion of ECB’s balance sheet which happened mainly due to Quantitative Easing is measured by a balance-sheet-to-GDP ratio. The sample consists of data from the third quarter of 2008 which is the time that ECB responded to the financial distress caused by the economic crisis of 2007 using for the first time unconventional monetary tools to conduct monetary policy, to the latest available data which is the last quarter of 2018. In order to estimate this effect and analyze the causal relationship between these two variables, a VAR model is used.