TY  - JOUR
AU  - Heathcote,Jonathan
AU  - Storesletten,Kjetil
AU  - Violante,Giovanni L.
TI  - Quantitative Macroeconomics with Heterogeneous Households
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14768
PY  - 2009
Y2  - March 2009
UR  - http://www.nber.org/papers/w14768
L1  - http://www.nber.org/papers/w14768.pdf
N1  - Author contact info:
Jonathan Heathcote
Federal Reserve Bank of Minneapolis
Research Department
90 Hennepin Ave.
Minneapolis, MN 55401
Tel: (612) 204-6385
E-Mail: heathcote@minneapolisfed.org

Kjetil Storesletten
Federal Reserve Bank of Minneapolis
Research Department
90 Hennepin Ave.
Minneapolis, MN 55401
Tel: +47 22844009
E-Mail: kjetil.storesletten@econ.uio.no

Giovanni L. Violante
Department of Economics
New York University
19 W. 4th Street
New York, NY 10012-1119
Tel: 212/992-9771
Fax: 212/995-3932
E-Mail: glv2@nyu.edu
AB  - Macroeconomics is evolving from the study of aggregate dynamics to the study of the dynamics of the entire equilibrium distribution of allocations across individual economic actors. This article reviews the quantitative macroeconomic literature that focuses on household heterogeneity, with a special emphasis on the "standard" incomplete markets model. We organize the vast literature according to three themes that are central to understanding how inequality matters for macroeconomics. First, what are the most important sources of individual risk and cross-sectional heterogeneity? Second, what are individuals' key channels of insurance? Third, how does idiosyncratic risk interact with aggregate risk?
ER  -