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Text of the page (random words):
ives the dynamics of the racial wealth gap we answer this question using a dynamic stochastic general equilibrium heterogeneous agents model our calibrated model endogenously produces a racial wealth gap matching that observed in recent decades along with key features of the current cross sectional distribution of wealth earnings intergenerational transfers and race our model predicts that equalizing earnings is by far the most important mechanism for permanently closing the racial wealth gap one time wealth transfers have only transitory effects unless they address the racial earnings gap and return gaps only matter when earnings inequality is reduced this is another paper that steps out of usual dsge modelling topics to address important questions for which that type of approach is particularly well suited for even if you disagree with some of the assumptions or the calibration it lays down a framework from where the discussion should start very promising 1 comment uncategorized permalink posted by christian zimmermann homelessness january 17 2023 by ayşe i̇mrohoroğlu and kai zhao http d repec org n u repec uct uconnp 2022 17 r dge this paper examines the effectiveness of several policies in reducing the aggregate share of homeless in a dynamic general equilibrium model the model economy is calibrated to capture the most at risk groups and generates a diverse population of homeless with a significant fraction becoming homeless for short spells due to labor market shocks and a smaller fraction experiencing chronic homelessness due to health shocks our policy experiments show housing subsidies to be more effective in reducing the aggregate homeless share mostly by helping those with short spells than non housing policies for the chronically homeless population a means tested expansion of disability income proves to be effective we also find that some policies that result in higher exit rates from homelessness such as relaxation of borrowing constraints help the currently homeless population but lead to a larger homeless share at the steady state by increasing the entry rate this is an excellent topic and approach people are going to debate the assumptions but this is at least a starting point to better understand what can work to curb homelessness i am looking forward to what will happen to this paper and what will follow leave a comment uncategorized permalink posted by christian zimmermann long term economic implications of demeny voting a theoretical analysis december 26 2022 by luigi bonatti and lorenza alexandra lorenzetti http d repec org n u repec ces ceswps _10039 r dge this paper places itself at the intersection between the literature on demeny voting the proposal of letting custodial parents exercise their children s voting rights until they come of age and the vast literature on formal models with endogenous fertility that address the problem of fiscal redistribution between young and old cohorts in the presence of an aging population linking these issues to the process of economic growth through a simple overlapping generations model we show that even if the government is myopic in the sense that it cares only about the current well being of the living and voting generations an increase in the relative importance that it attaches to the interests of the young cohort for instance due the introduction of demeny voting leads in the long run to a higher population growth rate and raises the consumption level of each young adult the capital stock per worker and the output per adult we also show that in the long run such a reform raises the well being that individuals can expect at birth to achieve during their lifetime today i learned about demeny voting it interesting to see that fertility not only increases because the benefits from having children improve but also because having more children gives more voting power i wonder how this would pan out if the model would include some benefits go to parents without improving the well being on children that is we could get a situation where children are pawns to political game leave a comment uncategorized permalink posted by christian zimmermann optimal gdp indexed bonds december 23 2022 by yasin kürsat önder http d repec org n u repec rug rugwps 22 1056 r dge i investigate the introduction of gdp indexed bonds as an additional source of government borrowing in a quantitative default model the idea of linking debt payments to developments in gdp resurfaced with the 1980s debt crisis and peaked with the covid 19 outbreak i show that the gains from this idea depend on the underlying indexation method and are highest if payments are symmetrically tied to developments in gdp optimized indexed debt can eradicate default risk halve consumption volatility and increase asset prices while raising the government s debt balances these changes occur because an optimally chosen indexation method does a better job at completing the markets this is not the first paper on this kind of bond that i mention on the blog visibly we are dealing with market incompleteness and people are suggesting particular assets to complete the market here one asset is proposed that has characteristics that make it resemble more a stock share than a bond highly variable dividends that depend on how an underlying asset the national economy performs under some metric this asset is optimal but can it really complete the market that is unlikely for this to happen you would need a menu of different assets that would be individually priced on a competitive market we are still far from that but if the constraint is that you can only have one asset then this paper shows how it would look like leave a comment uncategorized permalink posted by christian zimmermann crisis propagation in a heterogeneous self reflexive dsge model december 11 2022 by federico guglielmo morelli michael benzaquen jean philippe bouchaud and marco tarzia http d repec org n u repec hal journl hal 03378921 r dge we study a self reflexive dsge model with heterogeneous households aimed at characterising the impact of economic recessions on the different strata of the society our framework allows to analyse the combined effect of income inequalities and confidence feedback mediated by heterogeneous social networks by varying the parameters of the model we find different crisis typologies loss of confidence may propagate mostly within high income households or mostly within low income households with a rather sharp crossover between the two we find that crises are more severe for segregated networks where confidence feedback is essentially mediated between agents of the same social class for which cascading contagion effects are stronger for the same reason larger income inequalities tend to reduce in our model the probability of global crises finally we are able to reproduce a perhaps counter intuitive empirical finding in countries with higher gini coefficients the consumption of the lowest income households tends to drop less than that of the highest incomes in crisis times if you also wondered what a self reflexive dsge model is here is the lowdown this is a mixture of hank heterogeneous agent new keynesian models and abm agent based model you have the general equilibrium the heterogeneity and the dynamics of hank but some aspects of heterogeneity are fixed say skills earnings market structure but new dimensions are added such as social interaction a household s consumption preferences may be determined by the consumption of its neighbors this is not quite like the habit formation models or catch up with the joneses where the reference is aggregate consumption here a network with local interactions is built of course things are going to depend on how the network is set up and for this particular paper how rich and poor interact potentially crucially these interactions do not change as the economy slides into a crisis also the parameterization of the network appears to be impossible thus results are provided for all possible values showing that almost anything is possible one would need to narrow this down to give some valuable conclusions 2 comments uncategorized permalink posted by christian zimmermann credit misallocation and macro dynamics with oligopolistic financial intermediaries november 30 2022 by alessandro villa http d repec org n u repec fip fedhwp 94920 r dge bank market power shapes firm investment and financing dynamics and hence affects the transmission of macroeconomic shocks motivated by a secular increase in the concentration of the us banking industry i study bank market power through the lens of a dynamic general equilibrium model with oligopolistic banks and heterogeneous firms the lack of competition allows banks to price discriminate and charge firm specific markups in excess of default premia in turn the cross sectional dispersion of markups amplifies the impact of macroeconomic shocks during a crisis banks exploit their market power to extract higher markups inducing a larger decline in real activity when a big i e non atomistic bank fails the remaining banks use their increased market power to control the supply of credit worsening and prolonging the recession the results suggest that bank market power could be an important concern when formulating appropriate bail out polices positive implications of market power are really hard to come by this paper shows that this also applies to the banking sector but not in the usual to big to fail way market power here is making things worse in times of crisis in non negligible ways about 6 excess output drop in case of major bank failure which is why it must be dealt with already in non crisis times leave a comment uncategorized permalink posted by christian zimmermann full information estimation of heterogeneous agent models using macro and micro data november 27 2022 by laura liu and mikkel plagborg møller http d repec org n u repec pri econom 2022 21 r dge we develop a generally applicable full information inference method for heterogeneous agent models combining aggregate time series data and repeated cross sections of micro data to handle unobserved aggregate state variables that affect cross sectional distributions we compute a numerically unbiased estimate of the model implied likelihood function employing the likelihood estimate in a markov chain monte carlo algorithm we obtain fully efficient and valid bayesian inference evaluation of the micro part of the likelihood lends itself naturally to parallel computing numerical illustrations in models with heterogeneous households or firms demonstrate that the proposed full information method substantially sharpens inference relative to using only macro data and for some parameters micro data is essential for identification holy guacamole i am thoroughly impressed by this work only a few years ago we were struggling to simulate models that include aggregate state dependent distributions and now we are estimating them wow leave a comment uncategorized permalink posted by christian zimmermann optimal carbon pricing with fluctuating energy prices emission targeting vs price targeting november 24 2022 by alkis blanz ulrich eydam maik heinemann and matthias kalkuhl http d repec org n u repec pot cepadp 51 r dge prices of primary energy commodities display marked fluctuations over time market based climate policy instruments e g emissions pricing create incentives to reduce energy consumption by increasing the user cost of fossil energy this raises the question of whether climate policy should respond to fluctuations in fossil energy prices we study this question within an environmental dynamic stochastic general equilibrium e dsge model calibrated on the german economy our results indicate that the welfare implications of dynamic emissions pricing crucially depend on how the revenues are used when revenues are fully absorbed a reduction in emissions prices stabilizes the economy in response to energy price shocks however when revenues are at least partially recycled a stable emissions price improves overall welfare this result is robust to different modeling assumptions interesting topic i always wondered whether there would be value in energy price smoothing through taxation also looking at the political economy of carbon taxes would it make sense to increase the latter while energy prices are declining rather than whenever the law kicks in leave a comment uncategorized permalink posted by christian zimmermann previous entries follow me on twitter my tweets nep blogs nep ara economics of the mena middle east and north africa nep dge dynamic general equilibrium nep his business economic and financial history nep int international trade nep ltv unemployment inequality and poverty nep opm open macroeconomics nep pay the cashless society blogroll calls for papers christian zimmermann your editor econacademics blog 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