Inequality, Business Cycles, and Monetary-Fiscal Policy

dc.contributor.authorBhandari, Anmol
dc.contributor.authorEvans, David
dc.contributor.authorGolosov, Mikhail
dc.contributor.authorSargent, Thomas J.
dc.date.accessioned2019-07-30T18:58:01Z
dc.date.available2019-07-30T18:58:01Z
dc.date.issued2019-04
dc.description.abstractWe study optimal monetary and fiscal policy in a model with heterogeneous agents, incomplete markets, and nominal rigidities. We develop numerical techniques to approximate Ramsey plans and apply them to a calibrated economy to compute optimal responses of nominal interest rates and labor tax rates to aggregate shocks. Responses differ qualitatively from those in a representative agent economy and are an order of magnitude larger. Taylor rules poorly approximate the Ramsey optimal nominal interest rate. Conventional price stabilization motives are swamped by an across person insurance motive that arises from heterogeneity and incomplete markets.
dc.identifier.citationThis is a pre-print and has not been peer reviewed.
dc.identifier.urihttps://hdl.handle.net/10657/4337
dc.language.isoen_US
dc.subjectSticky prices
dc.subjectHeterogeneity
dc.subjectBusiness cycles
dc.subjectMonetary policy
dc.subjectFiscal policy
dc.titleInequality, Business Cycles, and Monetary-Fiscal Policy
dc.typeSeminar

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