Monetary and Fiscal Policy with Heterogeneity

Date(s) - 08/04/19 - 08/08/19
All Day

University of Chicago - Saieh Hall

Hosted by
University of Chicago

Monetary and Fiscal Policy with Heterogeneity

A Master Class for Central Bankers and Economists in Policy Institutions

August 4–8, 2019

University of Chicago

This four-day course is designed to familiarize economists with recent advances in the study of monetary and fiscal policy in the presence of heterogeneity. It is designed for researchers in central banks and other government and non-government agencies who wish to improve their understanding of state-of-the-art tools for incorporating income and wealth distributions into macroeconomic models, and the main policy lessons that have emerged from these models.

A growing literature argues that Heterogeneous Agent New Keynesian (HANK) models offer a useful framework for the analysis of macroeconomic shocks and policies. Advantages over traditional Representative Agent New Keynesian (RANK) models include the ability to study:
(i) new transmission mechanisms for monetary policy
(ii) the impacts of monetary and fiscal policy on wealth and income distributions
(iii) the conduct of policy in the presence of shocks that cannot be studied in the absence of heterogeneity

Many central banks have access to (or collect themselves) high-quality micro data on household and firm behavior. HANK models also open up the door to bringing this micro data to the table in order to empirically discipline macro theories.

Topics Include:

  • General equilibrium Heterogeneous Agent models with incomplete markets and uninsured idiosyncratic labor income risk
  • Computational tools for heterogeneous agent models in discrete and continuous time
  • Heterogeneous Agent models with sticky prices (HANK models)
  • Monetary Policy in HANK: interest rates rules, forward guidance, quantitative easing
  • Fiscal Policy in HANK: marginal propensities to consume, hand-to-mouth households
  • Computational tools for heterogeneous agent models with aggregate shocks
  • Bayesian estimation of HANK models (time permitting)

This master class will be limited to 20 participants.

An overview can be found here.