Work

Unconventional Monetary Policy According to HANK

Year: 2022

Type: report

Abstract: This paper studies the implications of household heterogeneity for the effectiveness of quantitative easing (QE).We consider a heterogeneous agent New Keynesian (HANK) model with uninsurable household income risk.Financial intermediaries are subject to an endogenous leverage constraint that allows QE to matter.We find that macro aggregates react very similarly to a QE shock in the HANK model compared to a representative agent (RANK) version of the model.This finding is robust across different micro-and macro-distributions of wealth.

Source: National Bureau of Economic Research

DOI: 10.3386/w30329

Authors: Eric Sims, Jing Cynthia Wu, Ji Zhang

Institutions: University of Notre Dame, Pennsylvania State University, National Bureau of Economic Research, University of Alabama, Renmin University of China, Tsinghua University

Language: English

Topic: Monetary Policy and Economic Impact

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

Funders: National Science Foundation, Marquette University, National Natural Science Foundation of China

Awards: G2301680663, The New Normal: Macroeconomic Stabilization Policy Post-Great Recession, G3514463260

OpenAlex ID: W4290695239

Cites: 24

Cited by: 11

Related to: 10