Abstract: In this paper, we consider a open economy NK-DSGE model with trade and nontrade sector, and investigate the distribution effects of China's monetary policy. The result shows that, consumption and real wage belongs to different household behaves differently, and consumption inequality and income inequality significantly upward when the positive technology shocks of trade sector shots the economy. Based on this, the result of policy evaluation argues that:(1)the optimal policy tends to decrease consumption inequality and income inequality;(2)if strict growth targeting policy implemented, consumption inequality and income inequality tends to the largest range of deterioration, and the nominal exchange rate targeting policy follows;(3)the impact of real exchange rate targeting policy on consumption inequality and income inequality is closer to optimal policy than other policy regime. Therefore, based on the perspective of the inequality that led by the distribution effect of monetary policy, monetary policy should respond to real exchange rate.

Key words: trade sector, non-trade sector, distribution effects, consumption inequality, income inequality