Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/336500 
Year of Publication: 
2026
Series/Report no.: 
Sveriges Riksbank Working Paper Series No. 461
Publisher: 
Sveriges Riksbank, Stockholm
Abstract: 
We study the transmission and distributional effects of monetary policy in an environment where consumption-saving choices reflect both precautionary motives and life-cycle considerations. Age emerges as a key state variable linking multiple dimensions of heterogeneity: young households have low wealth, high marginal propensities to consume, and strongly procyclical hours. In a quantitative model matching these facts, monetary policy operates primarily by stimulating investment and boosting labor demand for young workers. Wealthy retirees are affected through asset repricing and lower future returns, but the consumption and welfare effects for most retirees are small because they hold little financial wealth.
Subjects: 
HANK
Heterogeneous Agents
Life-Cycle Dynamics
Monetary Policy
Redistribution
JEL: 
E21
E32
E52
D31
D91
Document Type: 
Working Paper

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