TY  - BOOK
AU  - Dávila,Eduardo
AU  - Schaab,Andreas
ED  - National Bureau of Economic Research.
TI  - Optimal Monetary Policy with Heterogeneous Agents: Discretion, Commitment, and Timeless Policy 
T2  - NBER working paper series
PY  - 2023///
CY  - Cambridge, Mass.
PB  - National Bureau of Economic Research
KW  - Monetary Policy
KW  - jelc
KW  - Policy  Objectives • Policy Designs and Consistency • Policy Coordination
N1  - February 2023; Hardcopy version available to institutional subscribers
N2  - This paper characterizes optimal monetary policy in a canonical heterogeneous-agent New Keynesian (HANK) model with wage rigidity. Under discretion, a utilitarian planner faces the incentive to redistribute towards indebted, high marginal utility households, which is a new source of inflationary bias. With commitment, i) zero inflation is the optimal long-run policy, ii) time-consistent policy requires both inflation and distributional penalties, and iii) the planner trades off aggregate stabilization against distributional considerations, so Divine Coincidence fails. We compute optimal stabilization policy in response to productivity, demand, and cost-push shocks using sequence-space methods, which we extend to Ramsey problems and welfare analysis
UR  - https://www.nber.org/papers/w30961
UR  - http://dx.doi.org/10.3386/w30961
ER  -