Quantitative Macroeconomics with Heterogeneous Households

Jonathan Heathcote, Kjetil Storesletten and Giovanni Violante

No 14768, NBER Working Papers from National Bureau of Economic Research, Inc

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: E2 J22 (search for similar items in EconPapers)
Date: 2009-03
New Economics Papers: this item is included in nep-bec, nep-cba, nep-dge and nep-mac
Note: EFG
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Citations: View citations in EconPapers (298)

Published as Jonathan Heathcote & Kjetil Storesletten & Giovanni L. Violante, 2009. "Quantitative Macroeconomics with Heterogeneous Households," Annual Review of Economics, Annual Reviews, vol. 1(1), pages 319-354, 05.

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Journal Article: Quantitative Macroeconomics with Heterogeneous Households (2009)
Working Paper: Quantitative macroeconomics with heterogeneous households (2009)
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