MPCs, MPEs and Multipliers: A Trilemma for New Keynesian Models
We show that New Keynesian models with frictionless labor supply face a challenge: given standard parameters, they cannot simultaneously match plausible estimates of marginal propensities to consume (MPCs), marginal propensities to earn (MPEs), and fiscal multipliers. A HANK model with sticky wages provides a solution to this trilemma.
-
-
Copy CitationAdrien Auclert, Bence Bardóczy, and Matthew Rognlie, "MPCs, MPEs and Multipliers: A Trilemma for New Keynesian Models," NBER Working Paper 27486 (2020), https://doi.org/10.3386/w27486.Download Citation
-
Published Versions
Adrien Auclert & Bence Bardóczy & Matthew Rognlie, 2023. "MPCs, MPEs, and Multipliers: A Trilemma for New Keynesian Models," Review of Economics and Statistics, vol 105(3), pages 700-712. citation courtesy of 
More from the NBER
In addition to working papers, the NBER disseminates affiliates’ latest findings through a range of free periodicals — the NBER Reporter, the NBER Digest, the Bulletin on Health, and the Bulletin on Entrepreneurship — as well as online conference reports, video lectures, and interviews.
