Heterogeneity in macroeconomic models: A review of theory and computation

Julien Pascal

No 185, BCL working papers from Central Bank of Luxembourg

Abstract: This paper reviews the literature examining the consequences of heterogeneity in macroeconomic modeling, especially within the context of monetary and fiscal policy transmission. This review reveals that heterogeneity can significantly alter the transmission mechanisms of monetary policy in macroeconomic models and suggests possible advantages from collaboration between fiscal and monetary policies. The paper also provides a critical evaluation of various analytical and numerical methods to solve macroeconomic models with heterogeneity, underscoring the need for a careful methodological choice based on specific circumstances.

Keywords: Literature review; Heterogeneity; Monetary Policy; Fiscal Policy; Macroeconomic Modeling; HANK model. (search for similar items in EconPapers)
JEL-codes: C61 D31 E32 E52 E62 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2024-06
New Economics Papers: this item is included in nep-cba, nep-dge, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:bcl:bclwop:bclwp185

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