Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/278335 
Authors: 
Year of Publication: 
2023
Series/Report no.: 
MAGKS Joint Discussion Paper Series in Economics No. 04-2023
Publisher: 
Philipps-University Marburg, School of Business and Economics, Marburg
Abstract: 
We study the transmission of monetary policy in the presence of heterogeneous households and examine the implications when the share of constrained households is a function of monetary policy. We build an analytically tractable heterogeneous agent New Keynesian model (THANK) with an endogenous share of hand-to-mouth households. The transmission of monetary policy on aggregate demand is amplified in this setup by inequality between saver and hand-to-mouth households. The amplification effect depends on monopolistic rents (enhancing) and redistribution (mitigating). Unlike most THANK models, we refrain from the assumption of a full insurance steady state.
Subjects: 
Monetary Policy
Heterogeneous Households
Inequality
Aggregate Demand
Complementarity
Financial Conditions
Imperfect Insurance
JEL: 
E12
E21
E44
E52
E58
Document Type: 
Working Paper

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