A closer look at HANK, RANK and TANK
The standard New Keynesian paradigm serves as the foundation of policy analysis in almost all central banks around the world. However, recent economic events are challenging the standard macroeconomic models. The EU-funded HEMPEF project will develop an 'organising framework' focussing on the distinction between two types of agents of households or firms: those that are 'unconstrained' and those that are 'constrained'. With a focus on recent HANK (Heterogeneous Agent News Keynesian) models, the project will analyse this wedge and its components in order to understand the channels through which heterogeneity operates. It will also conduct a comparative analysis of the aggregate equilibrium dynamics of HANK and TANK (Two Agent New Keynesian) models. The latter, which preserve the tractability and ease of interpretation of the standard Representative Agent New Keynesian (RANK) model, restrict the heterogeneity to the presence of two types of agents (constrained and unconstrained).
Call for proposal
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