Monetary Policy According to HANK Kaplan, Greg; Moll, Benjamin; Violante, Giovanni L.
The American economic review,
03/2018, Letnik:
108, Številka:
3
Journal Article
Recenzirano
We revisit the transmission mechanism from monetary policy to household consumption in a Heterogeneous Agent New Keynesian (HANK) model. The model yields empirically realistic distributions of wealth ...and marginal propensities to consume because of two features: uninsurable income shocks and multiple assets with different degrees of liquidity and different returns. In this environment, the indirect effects of an unexpected cut in interest rates, which operate through a general equilibrium increase in labor demand, far outweigh direct effects such as intertemporal substitution. This finding is in stark contrast to small- and medium-scale Representative Agent New Keynesian (RANK) economies, where the substitution channel drives virtually all of the transmission from interest rates to consumption. Failure of Ricardian equivalence implies that, in HANK models, the fiscal reaction to the monetary expansion is a key determinant of the overall size of the macroeconomic response.
We analyze the secular decline in gross interstate migration in the United States from 1991 to 2011. We argue that migration fell because of a decline in the geographic specificity of returns to ...occupations, together with an increase in workers' ability to learn about other locations before moving. Micro data on earnings and occupations across space provide evidence for lower geographic specificity. Other explanations do not fit the data. A calibrated model formalizes the geographic specificity and information mechanisms and is consistent with cross-sectional and time-series evidence. Our mechanisms can explain at least half of the decline in migration.
The Wealthy Hand-to-Mouth KAPLAN, GREG; VIOLANTE, GIOVANNI L.; WEIDNER, JUSTIN
Brookings papers on economic activity,
03/2014, Letnik:
2014, Številka:
1
Journal Article
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The "wealthy hand-to-mouth" are households that hold little or no liquid wealth, whether in cash or in checking or savings accounts, despite owning sizable amounts of illiquid assets (assets that ...carry a transaction cost, such as housing or retirement accounts). We use survey data on household portfolios for the United States, Canada, Australia, the United Kingdom, Germany, France, Italy, and Spain to document the share of such households across countries, their demographic characteristics, the composition of their balance sheets, and the persistence of hand-to-mouth status over their life cycle. The portfolio configuration of the wealthy hand-to-mouth suggests that these households may have a high marginal propensity to consume out of transitory income changes, a prediction for which we find empirical support in PSID data. We explain the implications of this group of consumers for macroeconomic modeling and fiscal policy analysis.
Relative price dispersion refers to persistent differences in the price that different retailers set for one particular good relative to the price they set for other goods. Relative price dispersion ...accounts for 30 percent of the overall variance of prices at which the same good is sold during the same week and in the same market. Relative price dispersion can be rationalized as the consequence of a pricing strategy used by sellers to discriminate between high-valuation buyers who need to make all of their purchases in one store, and low-valuation buyers who are able to purchase different items in different stores.
This paper demonstrates that the option to move in and out of the parental home is a valuable insurance channel against labor market risk, which facilitates the pursuit of jobs with the potential for ...high earnings growth. Using monthly panel data, I document an empirical relationship among coresidence, individual labor market events, and subsequent earnings growth. I estimate the parameters of a dynamic game between youths and parents to show that the option to live at home can account for features of aggregate data for low-skilled young workers: small consumption responses to shocks, high labor elasticities, and low savings rates.
We propose a theory of self-fulfilling unemployment fluctuations. When a firm increases its workforce, it raises demand and weakens competition facing other firms, as employed workers spend more and ...have less time to search for low prices than unemployed workers. These effects induce other firms to hire more labor in order to scale up their presence in the product market. The feedback between employment and product market conditions generates multiple equilibria—and the possibility of self-fulfilling fluctuations—if differences in shopping behavior between employed and unemployed are large enough. Evidence on spending, shopping, and prices suggests that this is the case.
THE MORPHOLOGY OF PRICE DISPERSION Kaplan, Greg; Menzio, Guido
International economic review,
November 2015, Letnik:
56, Številka:
4
Journal Article
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Odprti dostop
This article is a study of the shape and structure of the distribution of prices at which an identical good is sold in a given market and time period. We find that the typical price distribution is ...symmetric and leptokurtic, with a standard deviation between 19% and 36%. Only 10% of the variance of prices is due to variation in the expensiveness of the stores at which a good is sold, whereas the remaining 90% is due, in approximately equal parts, to differences in the average price of a good across equally expensive stores and to differences in the price of a good across transactions at the same store. We show that the distribution of prices that households pay for the same bundle of goods is approximately Normal, with a standard deviation between 9% and 14%. Half of this dispersion is due to differences in the expensiveness of the stores where households shop, whereas the other half is mostly due to differences in households' choices of which goods to purchase at which stores. We find that households with fewer employed members pay lower prices and do so by visiting a larger number of stores instead of by shopping more frequently.
Inequality and the life cycle Kaplan, Greg
Quantitative economics,
November 2012, Letnik:
3, Številka:
3
Journal Article
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Odprti dostop
I structurally estimate an incomplete markets life‐cycle model with endogenous labor supply using data on the joint distribution of wages, hours, and consumption. The model is successful at matching ...the evolution of both the first and second moments of the data over the life cycle. The key challenge for the model is to generate declining inequality in annual hours worked over the first half of the working life, while respecting the constraints imposed by the data on consumption and wages. I argue that this is a robust feature of the data on life‐cycle labor supply that is strongly at odds with the intratemporal first‐order condition for labor. Allowing for a realistic degree of involuntary unemployment, coupled with preferences that feature nonseparability in the disutility of the extensive and intensive margins of hours worked, allows the model to overcome this challenge. The results imply that labor market frictions are important in jointly accounting for observed cross‐sectional inequality in labor supply and consumption, and may have quantitative relevance for analyses that exploit the intratemporal first‐order condition for labor.
We build a model of the US economy with multiple aggregate shocks that generate fluctuations in equilibrium house prices. Through counterfactual experiments, we study the housing boom-bust around the ...Great Recession, with three main results. First, the main driver of movements in house prices and rents was a shift in beliefs, not a change in credit conditions. Second, the boom-bust in house prices explains half of the corresponding swings in nondurable expenditures through a wealth effect. Third, a large-scale debt forgiveness program would have done little to temper the collapse of house prices and expenditures but would have dramatically reduced foreclosures and induced a small, but persistent, increase in consumption during the recovery.
Inflation at the household level Kaplan, Greg; Schulhofer-Wohl, Sam
Journal of monetary economics,
11/2017, Letnik:
91
Journal Article
Recenzirano
Odprti dostop
•We use scanner data to estimate inflation rates household by household.•The annual interquartile range of inflation rates is 6.2–9.0 percentage points.•Most heterogeneity comes from variation in ...prices paid for the same types of goods.•The poor have higher inflation, but most variation is unrelated to observables.•The serial correlation of inflation rates is only slightly negative.
We use scanner data to estimate inflation rates at the household level. Households’ inflation rates have an annual interquartile range of 6.2–9.0 percentage points. Most of the heterogeneity comes not from variation in broadly defined consumption bundles but from variation in prices paid for the same types of goods. Lower-income households experience higher inflation, but most cross-sectional variation is uncorrelated with observables. Households’ deviations from aggregate inflation exhibit only slightly negative serial correlation. Almost all variability in a household’s inflation rate comes from variability in household-level prices relative to average prices, not from variability in aggregate inflation.
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