Shocks, frictions, and inequality in US business cycles
By: Bayer, C., Born, B. and Luetticke, R
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Material type: 
BookPublisher: The American Economic Review Description: 114(5), May, 2024: p.1211-1247.Subject(s): Personal Income, Wealth, and Their Distributions Incomplete Markets, General Aggregative Models: Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory, Business Fluctuations; Cycles, Monetary Policy, Fiscal Policy
In:
The American Economic ReviewSummary: We show how a heterogeneous agent New Keynesian (HANK) model with incomplete markets and portfolio choice can be estimated in state space using a Bayesian approach. To render estimation feasible, the structure of the economy can be exploited and the dimensionality of the model automatically reduced based on the Bayesian priors. We apply this approach to analyze how much inequality matters for the business cycle and vice versa. Even when the model is estimated on aggregate data alone and with a set of shocks and frictions designed to match aggregate data, it broadly reproduces observed US inequality dynamics.- Reproduced
https://www.aeaweb.org/articles?id=10.1257/aer.20201875
| Item type | Current location | Call number | Vol info | Status | Date due | Barcode |
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Articles
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Indian Institute of Public Administration | 114(5), May, 2024: p.1211-1247 | Available | AR132564 |
We show how a heterogeneous agent New Keynesian (HANK) model with incomplete markets and portfolio choice can be estimated in state space using a Bayesian approach. To render estimation feasible, the structure of the economy can be exploited and the dimensionality of the model automatically reduced based on the Bayesian priors. We apply this approach to analyze how much inequality matters for the business cycle and vice versa. Even when the model is estimated on aggregate data alone and with a set of shocks and frictions designed to match aggregate data, it broadly reproduces observed US inequality dynamics.- Reproduced
https://www.aeaweb.org/articles?id=10.1257/aer.20201875
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