Monetary Policy in a Non-Representative Agent Economy: A Survey

Brzoza‐Brzezina, Michał; Kolasa, Marcin; Koloch, Grzegorz; Makarski, Krzysztof; Rubaszek, Michał

doi:10.2139/ssrn.1930846

SSRN Journal

2011

DOI: 10.2139/ssrn.1930846

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Monetary Policy in a Non-Representative Agent Economy: A Survey

Michał Brzoza‐Brzezina

Marcin Kolasa

Grzegorz Koloch

et al.

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Cited by 3 publications

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“…See Brzoza‐Brzezina et al . () and Deutsche Bundesbank () for earlier surveys of this literature. The present survey not only covers more recent empirical work and includes studies on the impact of macroprudential policies on inequality, but also discusses recent theoretical heterogeneous agents models examining how inequality affects the transmission of central bank policies.…”

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Central Bank Policies and Income and Wealth Inequality: A Survey

Colciago

Samarina

Haan

2019

Journal of Economic Surveys

138

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This paper reviews recent research on the relationship between central bank policies and inequality. A new paradigm which integrates sticky‐prices, incomplete markets, and heterogeneity among households is emerging, which allows for the joint study of how inequality shapes macroeconomic aggregates and how macroeconomic shocks and policies affect inequality. The new paradigm features multiple distributional channels of monetary policy. Most empirical studies, however, analyze each potential channel of redistribution in isolation. Our review suggests that empirical research on the effects of conventional monetary policy on income and wealth inequality yields mixed findings, although there seems to be a consensus that higher inflation, at least above some threshold, increases inequality. In contrast to common wisdom, conclusions concerning the impact of unconventional monetary policies on inequality are also not clear cut. To better understand policy effects on inequality, future research should focus on the estimation of General Equilibrium models with heterogeneous agents.

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mentioning

confidence: 99%

Central Bank Policies and Income and Wealth Inequality: A Survey

Colciago

Samarina

Haan

2019

Journal of Economic Surveys

138

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Monetary policy in an uncertain world: probability models and the design of robust monetary rules

Levine

2012

Indian Growth and Development Review

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The past forty years or so has seen a remarkable transformation in macro-models used by central banks, policymakers and forecasting bodies. This papers describes this transformation from reduced-form behavioural equations estimated separately, through to contemporary micro-founded dynamic stochastic general equilibrium (DSGE) models estimated by systems methods. In particular by treating DSGE models estimated by Bayesian-Maximum-Likelihood methods I argue that they can be considered as probability models in the sense described by Sims (2007) and be used for risk-assessment and policy design. This is true for any one model, but with a range of models on offer it is possible also to design interest rate rules that are simple and robust across the rival models and across the distribution of parameter estimates for each of these rivals as in . After making models better in a number of important dimensions, a possible road ahead is to consider rival models as being distinguished by the model of expectations. This would avoid becoming 'a prisoner of a single system' at least with respect to expectations formation where, as I argue, there is relatively less consensus on the appropriate modelling strategy.JEL Classification: E52, E37, E58

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Overlapping Generation Models with Heterogeneous Agents and Aggregate Uncertainty in Macroeconomic Modelling

Acedański

2015

KREM

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The paper introduces the methodology of the overlapping generations models with heterogeneous agents and aggregate uncertainty -macroeconomic, stochastic general equilibrium models that account for consumer heterogeneity mainly with respect to age and wealth. Taking as an example my own model, which additionally allows for labour market status and skill heterogeneity, I show how consumer consumption and investment decision rules are derived. I also provide a detailed discussion of the most popular computational algorithms used to deal with those models. The model is then used to examine welfare gains from eliminating business cycle fluctuations on the labour market in Poland for different groups of consumers.

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Monetary Policy in a Non-Representative Agent Economy: A Survey

Cited by 3 publications

References 144 publications

Central Bank Policies and Income and Wealth Inequality: A Survey

Central Bank Policies and Income and Wealth Inequality: A Survey

Monetary policy in an uncertain world: probability models and the design of robust monetary rules

Overlapping Generation Models with Heterogeneous Agents and Aggregate Uncertainty in Macroeconomic Modelling

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