Ben Moll on the Basics of HANK Models and How They Can Be Applied to Policymaking
Macro Musings with David Beckworth
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The Direct Effects and the Indirect Effects
In a representative agent newcangan model, am, it's all about the direct effects and very little about the indirect effects. So in any sort of quantitatively uno realistic decomposition you can do, more than 95 % is about the directeffects. In these heterogeneous models, however, there are other channels through which military policy could effect household consumption. And then labor income ends up back in people's pockets and increases consumption.
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