NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Macroeconomics with Heterogeneous Agents and Input-Output Networks

David Rezza Baqaee, Emmanuel Farhi

NBER Working Paper No. 24684
Issued in June 2018, Revised in September 2018
NBER Program(s):Economic Fluctuations and Growth, Productivity, Innovation, and Entrepreneurship

The goal of this paper is to simultaneously unbundle two interacting reduced-form building blocks of traditional macroeconomic models: the representative agent and the aggregate production function. We introduce a broad class of disaggregated general equilibrium models with Heterogeneous Agents and Input-Output networks (HA-IO).We characterize their properties through two sets of results describing the propagation and the aggregation of shocks. Our results shed light on many seemingly disparate applied questions, such as: sectoral comovement in business cycles; factor-biased technical change in task-based models; structural transformation; the effects of corporate taxation; and the dependence of fiscal multipliers on the composition of government spending.

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Document Object Identifier (DOI): 10.3386/w24684

 
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