MPCs, MPEs and Multipliers: A Trilemma for New Keynesian Models
Adrien Auclert (),
Bence Bardóczy and
Matthew Rognlie ()
No 27486, NBER Working Papers from National Bureau of Economic Research, Inc
We show that New Keynesian models with frictionless labor supply face a challenge: given standard parameters, they cannot simultaneously match plausible estimates of marginal propensities to consume (MPCs), marginal propensities to earn (MPEs), and fiscal multipliers. A HANK model with sticky wages provides a solution to this trilemma.
JEL-codes: D52 E52 E62 H31 (search for similar items in EconPapers)
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Working Paper: MPCs, MPEs and Multipliers: A Trilemma for New Keynesian Models (2020)
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