Quantitative Macroeconomics with Heterogeneous Households

Jonathan Heathcote, Kjetil Storesletten and Giovanni Violante

Annual Review of Economics, 2009, vol. 1, issue 1, 319-354

Abstract: Macroeconomics is evolving from the study of aggregate dynamics to the study of the dynamics of the entire equilibrium distribution of allocations across individual economic actors. This article reviews the quantitative macroeconomic literature that focuses on household heterogeneity, with a special emphasis on the “standard” incomplete markets model. We organize the vast literature according to three themes that are central to understanding how inequality matters for macroeconomics. First, what are the most important sources of individual risk and cross-sectional heterogeneity? Second, what are individuals’ key channels of insurance? Third, how does idiosyncratic risk interact with aggregate risk?

JEL-codes: D11 D52 D81 E13 E31 E32 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (301)

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Related works:
Working Paper: Quantitative macroeconomics with heterogeneous households (2009)
Working Paper: Quantitative Macroeconomics with Heterogeneous Households (2009)
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