- A-Z
- Jena Economics Rese...
- Volume 18
- Household Heterogen...
- Author
- published
- Thu Aug 22 2024
- Number of discussion paper
-
2024-006
- keyword(s)
-
Heterogeneity
Monetary policy
Nonseparable preferences
Real indeterminacy
TANK
Taylor principle
- abstract
-
We consider a two-agent New Keynesian model with savers and hand-to-mouth households with quasi-separable utility functions as introduced by Bilbiie (2020a). This framework allows for separate parameterization of consumption-hours complementarity and income effects on labor supply. We examine how variations in the size of income effects, the degree of non-separability between consumption and hours worked, and the share of hand-to-mouth households impact aggregate dynamics and determinacy properties of interest rate rules. Complementarity between consumption and hours worked and small income effects can reverse the Taylor principle and result in expansionary monetary contractions.
- article pub. typess JER
- Research article
- article languages JER
- Englisch
- JEL-Classification for JER
- E32 - Business Fluctuations; Cycles ; E52 - Monetary Policy ; E58 - Central Banks and Their Policies ; E44 - Financial Markets and the Macroeconomy ; E24 - Employment; Unemployment; Wages; Intergenerational Income Distribution