NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Christian Wolf

Department of Economics
Princeton University
Princeton, NJ, 08544

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: Princeton University

NBER Working Papers and Publications

June 2017When Inequality Matters for Macro and Macro Matters for Inequality
with SeHyoun Ahn, Greg Kaplan, Benjamin Moll, Thomas Winberry
in NBER Macroeconomics Annual 2017, volume 32, Martin Eichenbaum and Jonathan A. Parker, editors
When Inequality Matters for Macro and Macro Matters for Inequality
with SeHyoun Ahn, Greg Kaplan, Benjamin Moll, Thomas Winberry: w23494
We develop an efficient and easy-to-use computational method for solving a wide class of general equilibrium heterogeneous agent models with aggregate shocks, together with an open source suite of codes that implement our algorithms in an easy-to-use toolbox. Our method extends standard linearization techniques and is designed to work in cases when inequality matters for the dynamics of macroeconomic aggregates. We present two applications that analyze a two-asset incomplete markets model parameterized to match the distribution of income, wealth, and marginal propensities to consume. First, we show that our model is consistent with two key features of aggregate consumption dynamics that are difficult to match with representative agent models: (i) the sensitivity of aggregate consumption to...
 
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