Redistributive Policy Shocks And Monetary Policy With Heterogeneous Agents

Ojasvita Bahl, Chetan Ghate and Debdulal Mallick

No 455, IEG Working Papers from Institute of Economic Growth

Abstract: Governments in EMDEs routinely intervene in agriculture markets to stabilize food prices in the wake of adverse shocks. Such interventions usually involve a large increase in the procurement and redistribution of food, which we call a redistributive policy shock. What is the impact of a redistributive policy shock on inflation and the distribution of consumption amongst rich and poor households? We build a tractable two-sector-two-agent NK DSGE model calibrated to the Indian economy. We show that for an inflation targeting central bank, consumer heterogeneity matters for whether monetary policy responses to a variety of shocks raises aggregate welfare or not.

Keywords: TANK models; Inflation Targeting; Emerging Market and Developing Economies; Procurement and Redistribution; DSGE. (search for similar items in EconPapers)
JEL-codes: E31 E32 E44 E52 E63 (search for similar items in EconPapers)
Pages: 62 pages
Date: 2022-09-01
New Economics Papers: this item is included in nep-ban, nep-cba, nep-dge and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published as Institute of Economic Growth, Delhi, September 2022, pages 1-62

Downloads: (external link)
https://iegindia.org/upload/publication/Workpap/WP455.pdf (application/pdf)

Related works:
Working Paper: Redistributive Policy Shocks and Monetary Policy with Heterogeneous Agents (2024)
Working Paper: Redistributive Policy Shocks and Monetary Policy with Heterogeneous Agents (2020)
Working Paper: Redistributive Policy Shocks and Monetary Policy with Heterogeneous Agents (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:awe:wpaper:455

Access Statistics for this paper

More papers in IEG Working Papers from Institute of Economic Growth
Bibliographic data for series maintained by ().