23 giugno 2011, h 12:00
Christopher Carroll (Johns Hopkins University)
Krusell and Smith (1998) showed that it is possible to construct rational expectations macroeconomic models with serious microfoundations. We argue that three modifications to their framework are required to fulfill its promise. First, we replace their assumption about household income dynamics with a process that matches microeconomic data. Second, our agents have finite lifetimes a la Blanchard (1985), a modification that we argue has both substantive and technical benefits. Finally, we calibrate heterogeneity in time preference rates so that the model matches the observed degree of inequality in the wealth distribution. Our model has substantially different, and considerably more plausible, implications for macroeconomic questions like the aggregate marginal propensity to consume out of an economic ‘stimulus’ program.