The extensive monetary policy of central banks during the Great Recession has re-newed the
interest in the relation between (possibly) non-neutral money and wealth and income inequality.
In this work a dynamic general equilibrium model approach is used to study the effects of an
inflation rate change on inequality. These effects are found to be temporary and to work
through two channels: First at the consumer level intertemporal substitution effects differ
even under an identical policy rule of all agents due to individual skill and capital
endowments. This implies a transitory effect of inflation rate changes on inequality. Second
an indirect effect results from different capital intensities in industrial branches and
capital-labour substitution effects. This may be endorsed by varying individual skill levels.
The theoretical model's implications are tested empirically in a time series analysis on US
data.
