Abstract: Considering the reality of the co-existence of both the public sector employment and the non-public sector employment in China’s economy, this paper constructs a multi-sector dynamic stochastic general equilibrium model which contains both the public sector and the non-public sector, so as to investigate the impacts of monetary policy on consumption inequality and income inequality. The result shows that the expansionary monetary policy has widened the income gap between the two sectors, and then deteriorated the inequality in the economy. Based on this, it further explores the dynamic impact of monetary policy on the inequality under the conditions of the insider influences existing in the public sector. The results reveal that: (1) the more powerful the insiders’ influence is, the more powerful the deterioration effect of the expansionary monetary policy on the inequality will be. Further，we attempt to design monetary policy when inequality significantly exist in the economy. Then this paper finally gives a discussion on the design of the monetary policy in the context of the existing of significant inequality. （2）Whether there exists the insiders’ influence or not, the monetary policy which takes the inequality, especially the income inequality, as its goal can well alleviate the inequality. (3) The existence of the insiders’ influence will to some degree hinder the positive effects of the monetary policy which takes the alleviation of inequality as its goal.

Key words: public sector; non-public sector; consumption inequality; income inequality; monetary policy