Periodic Reporting for period 2 - HEMPEF (Heterogeneity, Monetary Policy and Economic Fluctuations)
Okres sprawozdawczy: 2022-01-01 do 2023-06-30
Most efforts at modelling aggregate fluctuations in recent decades have relied on frameworks that assume infinitely-lived representative households and firms. A number of researchers have called into question that strategy and have instead introduced different dimensions of heterogeneity in otherwise conventional macro models. Needless to say, the resulting models can address issues pertaining to the distributional consequences of different shocks or policy interventions that one cannot address in representative agent models. This is, however, at the cost of increasing significantly the complexity of the models and the methods used to solve for their equilibrium, and to limit the intuition one obtains about the main economic channels at work. The overarching objective of my project is to understand the extent to which and under what assumptions heterogeneity plays a significant role in accounting for an economy’s aggregate response to aggregate shocks, the key focus of macroeconomics. In addition, the project aims at understanding whether the presence of that heterogeneity has normative implications for the design of monetary policy, i.e. whether it affects how central banks should conduct monetary policy, relative to the prescriptions of a representative agent model.
So far I have written three working papers pertaining to the project:
- “Idiosyncratic Income Risk and Aggregate Fluctuations” (with D. Debortoli)
- “Monetary Policy with Heterogeneous Agents: Insights from Tank Models” (with D. Debortoli)
- “Monetary Policy and Endogenous Financial Crises” (with F. Boissay, F. Collard and C. Manea)
With D. Debortoli we have started to analyze micro data to gather empirical evidence regarding the relation between the wealth and consumption uncertainty.
I have presented the working papers at several conferences and seminars.
Together with my coauthors we plan to submit polished versions of these papers to top journals and to use some of the existing platforms (voxeu.org etc) to disseminate its main findings.
- “Idiosyncratic Income Risk and Aggregate Fluctuations” (with D. Debortoli)
- “Monetary Policy with Heterogeneous Agents: Insights from Tank Models” (with D. Debortoli)
- “Monetary Policy and Endogenous Financial Crises” (with F. Boissay, F. Collard and C. Manea)
With D. Debortoli we have started to analyze micro data to gather empirical evidence regarding the relation between the wealth and consumption uncertainty.
I have presented the working papers at several conferences and seminars.
Together with my coauthors we plan to submit polished versions of these papers to top journals and to use some of the existing platforms (voxeu.org etc) to disseminate its main findings.
The ultimate goal of the research funded by the present grant is twofold:
a) to evaluate the extent to which versions of the representative-agent New Keynesian model that currently dominate the analysis in academic and policy circles remains valid as frameworks for understanding aggregate fluctuations and their interaction with macro policies.
b) to develop tractable alternatives to the representative agent NK model that incorporate the main channels and mechanisms through which heterogeneity affects aggregate fluctuations in actual economies.
Needless to say, addressing these questions needs a collective effort that currently involves dozens of researchers, mostly in Europe and the US, and to which I hope to contribute significantly through the research funded by my ERC grant. What is clear is that the answer to the previous questions will shape macroeconomics over the next decades.
a) to evaluate the extent to which versions of the representative-agent New Keynesian model that currently dominate the analysis in academic and policy circles remains valid as frameworks for understanding aggregate fluctuations and their interaction with macro policies.
b) to develop tractable alternatives to the representative agent NK model that incorporate the main channels and mechanisms through which heterogeneity affects aggregate fluctuations in actual economies.
Needless to say, addressing these questions needs a collective effort that currently involves dozens of researchers, mostly in Europe and the US, and to which I hope to contribute significantly through the research funded by my ERC grant. What is clear is that the answer to the previous questions will shape macroeconomics over the next decades.