A HANK2 Model of Monetary Unions

Bayer, Christian; Kriwoluzky, Alexander; Müller, Gernot; Seyrich, Fabian

doi:10.2139/ssrn.4505423

Cited by 3 publications

(2 citation statements)

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“…We start by analyzing the effects of introducing minimum income benefits (MIB) that provide some public insurance against households' income risk. Following Bayer et al (2023c), we model MIB as a transfer tr i,t to household i contingent on the household's pre-tax labor income w t n i,t e i,t falling short of some threshold level:…”

Section: Minimum Income Benefits As Public Insurancementioning

confidence: 99%

“…Transfers thus decrease in individual income at the withdrawal rate a 2 and no transfers are paid to households whose labor income satisfies w t n i,t e i,t ≥ a 1 a 2 ȳ. Following Bayer et al (2023c), we set a 1 = 0.5 and a 2 = 0.8. and assume for simplicity that these transfers do not distort labor supply.…”

Section: Minimum Income Benefits As Public Insurancementioning

confidence: 99%

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Bad Luck or Bad Decisions? Macroeconomic Implications of Persistent Heterogeneity in Cognitive Skills and Overconfidence

Pfäuti,

Seyrich,

Zinman

2024

SSRN Journal

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Section: Minimum Income Benefits As Public Insurancementioning

confidence: 99%

Section: Minimum Income Benefits As Public Insurancementioning

confidence: 99%

Bad Luck or Bad Decisions? Macroeconomic Implications of Persistent Heterogeneity in Cognitive Skills and Overconfidence

Pfäuti,

Seyrich,

Zinman

2024

SSRN Journal

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Differences in euro‐area household finances and their relevance for monetary‐policy transmission

Hintermaier,

Koeniger

2024

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This paper quantifies mechanisms through which heterogeneity in household finances affects the transmission of monetary policy, considering housing tenure choices over the life cycle. Our analysis also identifies challenges for monetary policy related to housing busts. It focuses on the four largest economies in the euro area: France, Germany, Italy, and Spain. Through the lens of our model, we find that home ownership and endogenous transitions from renting to owning are key elements for the extent of cross‐country asymmetries in aggregate consumption responses to changes in the real interest rate. Across groups with different housing tenure, we find that the consumption response of homeowners to interest rate changes tends to be larger than the response of renters, particularly if these homeowners are indebted and do not adjust their illiquid housing wealth.

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Spillovers and Spillbacks

Acharya,

Pesenti

2024

Staff Reports (Federal Reserve Bank of New York)

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We study international monetary policy spillovers and spillbacks in a tractable two-country Heterogeneous Agent New Keynesian model. Relative to Representative Agent (RANK) models, our framework introduces a precautionary-savings channel, as households in both countries face uninsurable income risk, and a real-income channel, as households have heterogeneous marginal propensities to consume (MPC). While both channels amplify the size of spillovers/spillbacks, only precautionary savings can change their sign relative to RANK. Spillovers are likely to be larger in economies with higher fractions of high MPC households and more countercyclical income risk. Quantitatively, both channels amplify spillovers by 30-60 percent relative to RANK.

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A HANK2 Model of Monetary Unions

Cited by 3 publications

References 36 publications

Bad Luck or Bad Decisions? Macroeconomic Implications of Persistent Heterogeneity in Cognitive Skills and Overconfidence

Bad Luck or Bad Decisions? Macroeconomic Implications of Persistent Heterogeneity in Cognitive Skills and Overconfidence

Differences in euro‐area household finances and their relevance for monetary‐policy transmission

Spillovers and Spillbacks

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