Does Monetary Policy Affect Income Inequality?  Evidence from Regional-level data in Thailand

Nattawan Pitakkochakorn; Saran  Sarntisart; Md Nasir Uddin

doi:10.66445/twe.v44i2.276004

Authors

Nattawan Pitakkochakorn Graduate School of Development Economics National Institute of Development Administration (NIDA), Thailand
Saran Sarntisart Graduate School of Development Economics National Institute of Development Administration (NIDA), Thailand
Md Nasir Uddin Department of Economics, American International University-Bangladesh, Dhaka, Bangladesh / Pures College of Technology, Toronto, Ontario, Canada

DOI:

https://doi.org/10.66445/twe.v44i2.276004

Keywords:

Monetary Policy, Income Inequality, Regional-level Model in Thailand, ARDL Approach, SUR Estimates

Abstract

This study investigates whether monetary policy affects regional income inequality in Thailand through different channels. The study uses regional-level data from 2011 to 2022 and employs a panel ARDL approach, FGLS and SUR estimates. Monetary policy effectively propagates regional income inequality through aggregate income channels, housing price channels, and interest rate channels. Those channels show that easing monetary policy can mitigate regional income inequality. A negative coefficient is found for the housing price channel, indicating that the easing of monetary policy induces an increase in housing prices but a decrease in rental prices, so the low-end distribution, who mostly cannot afford the house would benefit from a lower rental rate. In addition, Bangkok Metropolitan Region is more sensitive to changes in monetary policy than other regions. These findings suggest new insights for policymakers and the government an easing monetary measure can mitigate regional inequality via economic stimulation through various channels. Therefore, the central bank may need to consider the impacts of monetary policy on regional disparities, as each region has distinct characteristics that lead to varying effects.

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