2016 Reports

Fed Policy, Inequality, and Equality of Opportunity

Stiglitz, Joseph E.

Many are concerned that America has not been doing well in either equality of outcomes or opportunity. Our nation has obtained the dubious distinction of being the country among advanced countries with the highest level of inequality of outcomes and one of the lowest levels of equality of opportunity. This paper discusses the issue of inequality and inequality of opportunity, how Federal Reserve policies affect inequality, and what implications inequality should have for the conduct of Fed policy. I shall address both its role in macroeconomic management and in the regulation of financial markets. After a brief review of the state of inequality in the United States today, I will discuss the various channels through which the Federal Reserve affects inequality.