IESET.
Hypotheses·monetary·interest_rate_hike_distributional_upward_redistribution

Sustained policy-rate hikes (≥300bp cumulative within 18 months) in advanced economies redistribute disposable income upward across household quintiles in the 24 months after the hike begins: net-saver households (top quintile, 60-80% of net interest-bearing assets) gain interest income while net-debtor and renter households (bottom three quintiles) face higher mortgage costs, higher rents passed through from landlord financing costs, and tightened consumer credit.

The distributional incidence of contractionary monetary policy is regressive in advanced economies, contradicting the textbook "monetary policy is distribution-neutral" framing implicit in standard New-Keynesian models. Effect tested on the post-2022 Fed, ECB, BoE tightening cycles using LIS / OECD distributional accounts.

INCONCLUSIVEengine/runs/interest_rate_hike_distributional_upward_redistribution

INCONCLUSIVE_DATA_PENDING — insufficient observations after listwise deletion (0)

confidence cueResult card produced; verdict unclassified.

policy briefCoverage too thin

In ordinary language

Over a long period, do more market-oriented institutions translate into higher income or productivity, once the comparison looks beyond a single success story?

plain answer

This test cannot make a firm call yet. insufficient observations after listwise deletion (0)

why it matters

This matters because monetary claims should change belief only when they survive a pre-declared empirical test.

how the test works

It compares 6 country or place units from 2018 to 2024, using a panel fe design, with fixed effects for country and year.

what was measured
What changed
  • Cumulative policy rate change
  • Tightening cycle indicator
What we checked
  • Real disposable income growth by quintile
  • Net interest income share by quintile
  • Mortgage payment to income ratio
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

No evidence packet has been generated yet.

Results

engine/runs/interest_rate_hike_distributional_upward_redistribution
1007550250201820212024USAGBRDEUFRAITAESP
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show real_disposable_income_growth_by_quintile across 6 sampled countries over 2018–2024.
The shapes above are stylised — none of the lines are real data.
Placeholder for interest_rate_hike_distributional_upward_redistribution. Published chart will be generated from engine/runs/interest_rate_hike_distributional_upward_redistribution/chart_data.json.

Pre-registration

registration ordering unverified
first-spec commit 4c8ce8e · 2026-07-18T22:11:21Z
run generated · 2026-06-29T17:54:21Z
Run timestamp predates this path's first git-add commit (rebase, rename, or pre-git local run). Spec hash is still the path's first-add commit — not repository HEAD — but ordering is not a clean pre-registration proof.

Sustained policy-rate hikes (≥300bp cumulative within 18 months) in advanced economies redistribute disposable income upward across household quintiles in the 24 months after the hike begins: net-saver households (top quintile, 60-80% of net interest-bearing assets) gain interest income while net-debtor and renter households (bottom three quintiles) face higher mortgage costs, higher rents passed through from landlord financing costs, and tightened consumer credit. The distributional incidence of contractionary monetary policy is regressive in advanced economies, contradicting the textbook "monetary policy is distribution-neutral" framing implicit in standard New-Keynesian models. Effect tested on the post-2022 Fed, ECB, BoE tightening cycles using LIS / OECD distributional accounts.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

The hypothesis is falsified if any of the following hold across the USA, GBR, and the Eurozone Big-4 (DEU, FRA, ITA, ESP) over the 2022Q3-2024Q4 tightening cycle: (a) bottom-quintile real disposable income falls by less than top-quintile real disposable income in the 24 months following the rate-hike start, (b) the gap in disposable-income growth between top and bottom quintiles is less than 2 percentage points cumulative, OR (c) the renter vs mortgage-holder housing-cost ratio does not widen in favour of mortgage holders by at least 5% over the hike cycle. Falsification requires majority (≥4 of 6) country failure on the primary gate (a).

formal test & threshold
test:      distributional_incidence_post_2022_tightening_cycle
threshold: bottom_q_disposable_income_growth - top_q_disposable_income_growth <= -2 pp in >=4 of 6 countries over 2022Q3-2024Q4

Method

Template
panel_fe
Fixed effects
country, year
Clustering
country
Sample
6 countries · 2018 – 2024
Evidence type
associational

Country-quarter panel with quintile-level disposable-income growth as outcome, cumulative policy-rate change as treatment, with quintile-by-tightening-cycle interaction. Robustness: difference-in-differences across pre/post tightening start using LIS micro-data where available. Reports both nominal and real (deflated by quintile-specific CPI) disposable-income growth.

Data

VariableSourceTransform
real_disposable_income_growth_by_quintile
outcome
oecd:distributional_national_accountstier 2
lis:disposable_income_quintiletier 5
pct_yoy_real_per_quintile
net_interest_income_share_by_quintile
outcome
oecd:distributional_national_accountstier 2
eurostat:icw_sr_05tier 1
share_of_disposable_income
mortgage_payment_to_income_ratio
outcome
oecd:OECD_AffordableHousingtier 2
fred:HHDFA (USA)tier 1
ratio
rent_to_income_ratio_by_quintile
outcome
eurostat:ilc_lvho07ctier 1
bls:CES (USA)tier 1
ratio_by_quintile
cumulative_policy_rate_change
treatment
fred:DFF (USA)tier 1
ecb:FM (EUR)tier 1
boe:IUDBEDR (GBR)tier 1
bp_cumulative_18m
tightening_cycle_indicator
treatment
constructed:indicator = 1 from 2022Q3 (Fed/ECB) or 2021Q4 (BoE) through 2024Q4tier 5
binary
real_gdp_growth
control
world_bank_wdi:NY.GDP.MKTP.KD.ZGtier 2
pct_change_yoy
unemployment_rate_by_quintile
control
ilostat:unemployment_ratetier 2
pct_labour_force
cpi_inflation_yoy
control
fred:CPIAUCSL (USA)tier 1
ecb:HICP (EUR)tier 1
boe:CPI (GBR)tier 1
pct_change_yoy
cpi_inflation_by_quintile
control
ons:lcf_quintile_cpitier 1
bls:cex_lower_income_cpitier 1
pct_yoy_per_quintile

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — interest_rate_hike_distributional_upward_redistribution

Verdict: INCONCLUSIVE_DATA_PENDING — insufficient observations after listwise deletion (0)

Pre-registration

  • Claim: Sustained policy-rate hikes (≥300bp cumulative within 18 months) in advanced economies redistribute disposable income upward across household quintiles in the 24 months after the hike begins: net-saver households (top quintile, 60-80% of net interest-bearing assets) gain interest income while net-debtor and renter households (bottom three quintiles) face higher mortgage costs, higher rents passed through from landlord financing costs, and tightened consumer credit. The distributional incidence of contractionary monetary policy is regressive in advanced economies, contradicting the textbook "monetary policy is distribution-neutral" framing implicit in standard New-Keynesian models. Effect tested on the post-2022 Fed, ECB, BoE tightening cycles using LIS / OECD distributional accounts.
  • Falsification rule: The hypothesis is falsified if any of the following hold across the USA, GBR, and the Eurozone Big-4 (DEU, FRA, ITA, ESP) over the 2022Q3-2024Q4 tightening cycle: (a) bottom-quintile real disposable income falls by less than top-quintile real disposable income in the 24 months following the rate-hike start, (b) the gap in disposable-income growth between top and bottom quintiles is less than 2 percentage points cumulative, OR (c) the renter vs mortgage-holder housing-cost ratio does not widen in favour of mortgage holders by at least 5% over the hike cycle. Falsification requires majority (≥4 of 6) country failure on the primary gate (a).
  • Falsification test: distributional_incidence_post_2022_tightening_cycle

Estimate

  • Error: insufficient observations after listwise deletion (0)

Variables resolved

  • oecd:distributional_national_accounts; eurostat:icw_sr_05 → net_interest_income_share_by_quintile (outcome, publisher=eurostat, n=87)
  • eurostat:ilc_lvho07c; bls:CES (USA) → rent_to_income_ratio_by_quintile (outcome, publisher=bls, n=3)
  • fred:DFF (USA); ecb:FM (EUR); boe:IUDBEDR (GBR) → cumulative_policy_rate_change (treatment, publisher=fred+ecb+boe, n=158)
  • constructed: indicator = 1 from 2022Q3 (Fed/ECB) or 2021Q4 (BoE) through 2024Q4 → tightening_cycle_indicator (treatment, publisher=constructed, n=42)
  • world_bank_wdi:NY.GDP.MKTP.KD.ZG → real_gdp_growth (controls, publisher=world_bank_wdi, n=13897)
  • ilostat:unemployment_rate → unemployment_rate_by_quintile (controls, publisher=ilostat, n=10188)
  • fred:CPIAUCSL (USA); ecb:HICP (EUR); boe:CPI (GBR) → cpi_inflation_yoy (controls, publisher=fred, n=480)

Variables missing data

  • oecd:distributional_national_accounts; lis:disposable_income_quintile (manual) (outcome, name=real_disposable_income_growth_by_quintile) — vintage not on disk
  • oecd:OECD_AffordableHousing; fred:HHDFA (USA) (outcome, name=mortgage_payment_to_income_ratio) — vintage not on disk
  • ons:lcf_quintile_cpi; bls:cex_lower_income_cpi (controls, name=cpi_inflation_by_quintile) — vintage not on disk

Generated by scripts/run_panel_fe.py at 2026-06-29T17:54:21+00:00

Strongest opposing argument

Every hypothesis ships with its charitable opposing argument. The framework earns credibility by handling objections at their strongest, not weakest.

Notes

PK-Minsky and Marxian readings of monetary policy emphasise the distributional channel: contractionary money targets the wage-price spiral by raising debtor-side costs, with the distributional incidence systematically falling on lower-income households. Mainstream framings treat the distributional effect as a side-effect of an aggregate-demand intervention; PK reads it as the operative channel. Hypothesis tests the distributional incidence directly using OECD/Eurostat distributional national accounts plus mortgage/rental affordability indicators.

Authored framework. Read the transparency note.