Macroeconomics with Heterogeneous Agents and Input-Output Networks

David Baqaee and Emmanuel Farhi

No 13006, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: The goal of this paper is to simultaneously unbundle two interacting reduced-form building blocks of traditional macroeconomic models: the representative agent and the aggregate production function. We introduce a broad class of disaggregated general equilibrium models with Heterogeneous Agents and Input-Output networks (HA-IO). We characterize their properties through two sets of results describing the propagation and the aggregation of shocks. Our results shed light on many seemingly disparate applied questions, such as: sectoral comovement in business cycles; factor-biased technical change in task-based models; structural transformation; the effects of corporate taxation; and the dependence of fiscal multipliers on the composition of government spending.

Keywords: Production networks; Heterogeneous agents; Comovement; Propagation; Aggregation (search for similar items in EconPapers)
Date: 2018-06
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (18)

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Working Paper: Macroeconomics with Heterogeneous Agents and Input-Output Networks (2018)
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