TY  - BOOK
AU  - Bhandari,Anmol
AU  - Evans,David
AU  - Golosov,Mikhail
AU  - Sargent,Thomas J.
ED  - National Bureau of Economic Research.
TI  - Inequality, Business Cycles, and Monetary-Fiscal Policy
T2  - NBER working paper series
PY  - 2018///
CY  - Cambridge, Mass.
PB  - National Bureau of Economic Research
N1  - June 2018; Hardcopy version available to institutional subscribers
N2  - We study optimal monetary and fiscal policy in a model with heterogeneous agents, incomplete markets, and nominal rigidities. We develop numerical techniques to approximate Ramsey plans and apply them to a calibrated economy to compute optimal responses of nominal interest rates and labor tax rates to aggregate shocks. Responses differ qualitatively from those in a representative agent economy and are an order of magnitude larger. Taylor rules poorly approximate the Ramsey optimal nominal interest rate. Conventional price stabilization motives are swamped by an across person insurance motive that arises from heterogeneity and incomplete markets
UR  - https://www.nber.org/papers/w24710
UR  - http://dx.doi.org/10.3386/w24710
ER  -