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A distributional effect is the effect and impact of the redistribution of the final gains and costs derived from the direct gains and cost allocations of the project. A project has a direct-profit redistribution effect and a direct cost redistribution effect. But whether it is profit or cost, their redistribution effect can be expressed as a benefit to a group of people or a department or a region, and the loss of the other party can also be expressed as unilateral gain without loss. It is a unilateral loss and no gain. In theory, the indirect profit and indirect costs can also be derived from the redistribution effect and valued.

Inflation related
Inflation will have various effects on an individual's economic life, and will also have a major impact on the economic life of the whole society. One of the effects of inflation on the economy is the income distribution effect of inflation.
 * Inflation has a negative impact on people who depend on fixed money income to maintain their lives. For the fixed income class, their income is a fixed amount of money, which lags behind the rise in price level, causing their actual purchasing power of monetary income declines, their actual income decreases due to inflation, and their income cannot follow If the inflation rate changes, their living standards will inevitably decrease.


 * In real life, people who rely on government relief to maintain their lives are more vulnerable to inflation, because the adjustment of payment transfer by governments is relatively slow. Furthermore, salaried class, civil servants, and others who depend on welfare and transfer payments to maintain their lives are more vulnerable to such shocks. Those who earn incomes that change with inflation will benefit from inflation. For example, workers in the expanding industry who have strong union’s support, their wage contracts have provisions for wages that increase with the rise in living expenses, or there are strong unions negotiating on their behalf. There is a possibility of substantial wage increases in new contracts.


 * Inflation is not good for savers. As prices rise, the purchasing power of deposits will fall, and those who hold idle currency deposited in the bank will be severely hit. Similarly, insurance premiums, pensions, and other fixed-value securities assets were originally intended to use as precautionary saving or pension, and their actual value will fall in inflation.


 * Inflation also creates a redistribution of income between the debtor and the creditor. Specifically, inflation sacrifices the interests of creditors to benefit the debtor. For example, A borrows 10,000 dollars from B and agreed to return it after one year. Assuming inflation occurs in the year and the price doubles, the amount A returned to B can only purchase half of the original purchase of products and services, which is to say, inflation causes B to lose half of its actual income. In order to reflect the impact of inflation on the borrower’s actual income, the real interest rate is generally used instead of the nominal interest rate. The actual interest rate is equal to the nominal interest rate minus the inflation rate. Assuming the bank deposit rate is 5% and the inflation rate is 10%, At this point, the actual rate of return on deposits is -5% - (5% - 10% = -5%)

Practical research shows that since World War II, Western governments have obtained a large amount of redistributed wealth from inflation. There are two sources: First, the government has received inflation tax revenue. Because some taxes in government taxation are progressive, such as personal income tax, during the inflation period, individuals' nominal income could increase. They need to pay income tax as their income amount has reached the next bracket, others who originally paid taxes will enter higher tax levels, the government hence receive more taxes. Therefore, some Western economists believe that it is difficult to hope that the government will try to stop inflation. Second, in the modern economy, the government has issued government bonds as a means of raising funds and a means by which the government regulates the economy, so that the government has a larger amount of national debt, and inflation makes the government benefit as a debtor.

Monetary policy related
Taking the expansionary monetary policy as an example, it analyzes several channels through which monetary policy affects income distribution.

The first is the asset portfolio. As far as the expansionary monetary policy is concerned, cash, deposits and other assets have no or relatively stable gain, and their purchasing power is more likely to be affected. House estates, gold, and other physical assets have strong anti-inflation functions, or the rate of return is related more closely to the speed of money expansion. Therefore people with different assets will be affected differently.

Generally, the proportion of holding cash, deposits is relatively high in low-income individual, and the proportion of high-income people holding physical assets is relatively high. Therefore, the expansionary monetary policy will increase the income gap due to different asset portfolios. The asset portfolio channel involves the redistribution of stock wealth. For example, under the expansionary monetary policy, asset prices, especially housing prices, tend to increase even more, and industrial product prices increase less. Because high-income people hold more assets, thus will Increase the income gap. In the case of hyperinflation, this channel will have a major impact on income distribution, and the savings or pensions accumulated by low-income people for many years will shrink sharply.

Second is the income channel. For wage income or fixed income earners, the expansionary monetary policy has reduced the purchasing power of their income, the quality of life has declined. The income level of floating income earners will change with inflation or the nominal return on assets is high, are less affected. Especially for profit holders, Inflation leads to a decline in real wages and the remaining profits the level will rise accordingly and benefit from it.

The third is the financial participation channel. Inflation reduces the debt burden and skews income distribution from creditors to debtors. Inflation will benefit people who have the opportunity and the ability to increase their debt. Similarly, as expansionary monetary policy is first transmitted to financial markets, and the price of financial products rises, the income level of more people participating in financial markets will increase faster.

Fourth is the channel of capital accumulation. Monetary expansion will accelerate the accumulation of capital in the whole society. The proportion of capital elements relative to labor factors will increase from the total output of society, which will increase the income gap of the whole society.

Fifth is the financial aid channel. Unconventional quantitative easing monetary policy will reduce the interest rate when purchasing certain financial assets, and related companies can use lower interest rates. The central bank’s targeted support is more obvious when it comes to bailing out individual financial institutions. The nature of the fiscal policy. In general, the expansion of the central bank's asset side directly benefits some institutions or groups of people, and the expansion of the debtor or the loss of the assets side is borne by the entire public. This has a clear income distribution effect. During the crisis rescue process, the US Congress repeatedly asked the Fed about the issue of interest distribution.

The expansionary monetary policy is more beneficial to those who have more physical assets, more participation in the financial market, more flexible income levels and more liabilities. These people are usually those with higher income levels. It is even more disadvantageous for those who have more cash deposits, less financial market participation, fixed income and less debt. These people are usually low-income earners, which will increase the income gap.

At the same time, the expansion of monetary policy through two channels is also likely to reduce the income gap. First, low-interest rates (expansion monetary policy) can damage savers (reducing their interest income) and favor borrowers. Since savers are usually richer, they may reduce the income gap. Savings here refers to broad-based assets, and interest refers to the income of various assets. One of the main goals of the expansionary monetary policy is to reduce the unemployment rate, which is the majority of the income of low-income people, thus helping to reduce the income gap of the whole society.