The paper studies the effects on consumer spending and employment of the measures implemented by the Federal Reserve during the pandemic. The analysis is based on VAR models that link monetary policy shocks to daily trends in per capita spending and employment in different US counties and to measures of inequality for these variables. Shocks are distinguished between purely monetary shocks and those similar to fiscal measures.
Fed policies boosted consumption and employment in both richer and poorer counties, but more intensely in the former. The main channel of transmission was in fact the increase in the value of financial assets, mostly held in the richest counties. The increase in spending inequality is attributable more to interventions relating to emergency plans to support employment than to measures closely linked to monetary policy.