Monetary Policy According to HANK

@article{Kaplan2016MonetaryPA,
  title={Monetary Policy According to HANK},
  author={Greg Kaplan and Benjamin Moll and Giovanni L. Violante},
  journal={ECB: Working Paper Series (Topic)},
  year={2016}
}
We revisit the transmission mechanism of monetary policy for household consumption in a Heterogeneous Agent New Keynesian (HANK) model. The model yields empirically realistic distributions of household wealth and marginal propensities to consume because of two key features: multiple assets with different degrees of liquidity and an idiosyncratic income process with leptokurtic income changes. In this environment, the indirect effects of an unexpected cut in interest rates, which operate through… Expand
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