Quantitative easing and household wealth inequality across the euro area

We examine how the unconventional monetary policies implemented by the ECB, namely negative deposit facility rate (NDFR) and quantitative easing (QE), affect asset portfolios and wealth distributions across European households. Using micro survey data from the Household Finance and Consumption Survey (HFCS), first we estimate wealth distributions across Euro Area countries. Second, we simulate how shocks in the price of assets, due to policy announcement and implementation, affect household’s capital gains depending on their level of wealth. We find that housing represents the largest share of households’ assets across all Euro Area countries and that wealth inequality increases from 2010 to 2014. Overall, unconventional monetary policies have a positive effect on households’ capital gains across all groups of the wealth distribution. However, households at the bottom end of the distribution benefit mostly from the NDFR, whereas households at the top end benefit mostly from QE policies.