Research On Income Distribution Effect Of Monetary Policy From The Perspective Of Common Prosperity

Common prosperity is the Party’s original mission,an important goal of socialist modernization and the common expectation of the people,as well as an important part of the overall situation of the strategy for the great rejuvenation of the Chinese nation.On the road to common prosperity,the key breakthrough is to focus on narrowing the income gap between residents and alleviating structural income inequality between urban and rural areas,industries and regions.Monetary policy,which is usually considered as an aggregate type of regulation,is in fact far from neutral in a distributional sense.The stance of monetary policy has important implications for income distribution.Therefore,this paper explores the impact of China’s expansionary monetary policy on income disparity under the theme of income distribution effect of monetary policy under the perspective of common prosperity.Firstly,this paper clarifies the connotation of common wealth in the early stage and the new development stage from the perspective of historical evolution,and analyzes the current situation of income disparity among residents,between urban and rural areas,between industries and between regions in China,and concludes that the income disparity in China is still too large at the present stage.Therefore,narrowing the income gap between residents,urban and rural areas,industries and regions is a key challenge to be solved in order to achieve common prosperity.Secondly,this paper clarifies the transmission mechanism of the income distribution effect of monetary policy: monetary policy will affect the income gap through the income composition channel,financial segmentation channel,savings redistribution channel and wage heterogeneity channel,and the direction of the effect of each channel is not consistent,so it is impossible to judge the final effect of monetary policy on income distribution under the action of multiple channels through theoretical analysis.In view of this,this paper further analyzes the impact of monetary policy on income disparity empirically by combining realistic data in China and constructing a time series model and a fixed effects model,and concludes that expansionary monetary policy will widen the income disparity among residents,urban-rural income disparity,industry income disparity and regional income disparity in China.Finally,based on the research findings,we propose policy recommendations to achieve common prosperity and narrow the income gap: First,the central bank should use expansionary monetary policy cautiously,consider maintaining price stability as its basic purpose,and ensure stable prices,so as to solve the polarization problem brought by expansionary monetary policy from the root.Secondly,it should adhere to a prudent monetary policy,while increasing the use of structural monetary policy tools to innovate and improve the system of structural monetary policy tools.Third,fiscal policy should be used reasonably to mitigate the adverse effects of expansionary monetary policy on inequality.The role of fiscal policy in regulating income distribution and promoting social equity should be given full play.Fourth,to establish a sound social security system and public health service system,create more sufficient jobs,and build a more reasonable income distribution structure to help gradually achieve common prosperity.