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When inequality matters for macro and macro matters for inequality

Author(s): Ahn, SeHyoun; Kaplan, Greg; Moll, Benjamin; Winberry, T; Wolf, Christian

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dc.contributor.authorAhn, SeHyoun-
dc.contributor.authorKaplan, Greg-
dc.contributor.authorMoll, Benjamin-
dc.contributor.authorWinberry, T-
dc.contributor.authorWolf, Christian-
dc.date.accessioned2019-07-11T19:04:05Z-
dc.date.available2019-07-11T19:04:05Z-
dc.date.issued2018-01-01en_US
dc.identifier.citationAhn, SH, Kaplan, G, Moll, B, Winberry, T, Wolf, C. (2018). When inequality matters for macro and macro matters for inequality. NBER Macroeconomics Annual, 32 (1), 1 - 75. doi:10.1086/696046en_US
dc.identifier.issn0889-3365-
dc.identifier.urihttp://arks.princeton.edu/ark:/88435/pr1vm8g-
dc.description.abstract© 2018 by the National Bureau of Economic Research. All rights reserved. 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: (1) the sensitivity of aggregate consumption to predictable changes in aggregate income, and (2) the relative smoothness of aggregate consumption. Second, we extend the model to feature capital-skill complementarity and show how factor-specific productivity shocks shape dynamics of income and consumption inequality.en_US
dc.format.extent1 - 75en_US
dc.language.isoenen_US
dc.relation.ispartofNBER Macroeconomics Annualen_US
dc.rightsFinal published version. Article is made available in OAR by the publisher's permission or policy.en_US
dc.titleWhen inequality matters for macro and macro matters for inequalityen_US
dc.typeJournal Articleen_US
dc.identifier.doidoi:10.1086/696046-
dc.identifier.eissn1537-2642-
pu.type.symplectichttp://www.symplectic.co.uk/publications/atom-terms/1.0/journal-articleen_US

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