How Would Monetary Policy look if John Rawls was Chairman of the Fed?

Central banks are key players in shaping economic policies. To help them crafting optimal monetary policy, they rely on economic models that maximize social welfare. Usually they use a utilitarian social welfare function, in which social welfare is the sum of individual welfare. The objective of this paper is to identify and compare optimal monetary policy under different social welfare functions, in particular under a Rawlsian social welfare function. For that we use a textbook New Keynesian model to which we add heterogeneous agents. We show how optimal monetary policy under alternative social welfare functions deviate from the utilitarian case, i.e. does a Rawlsian central bank gives more or less weight to inflation (or to the output gap or to inequality) than a utilitarian one? By calibrating the model we also assess whether central banks indeed behave in line with a utilitarian objective function or if they deviate from it.