Template-Type: ReDIF-Paper 1.0
Author-Name: Giorgio Motta
Author-Name-First: Giorgio
Author-Name-Last: Motta
Author-Name: Patrizio Tirelli
Author-Name-First: Patrizio
Author-Name-Last: Tirelli
Title: Limited asset market participation, income inequality and macroeconomic volatility
Abstract: By introducing external consumption habits and Limited Asset Market Participation in an otherwise standard New Keynesian DSGE model we uncover a causality link between limited asset market participation, consumption inequality and macroeconomic volatility. We also obtain that monetary contractions have redistributive effects in favour of asset holders, broadly confirming the findings in Coibion et al. (2012). Finally we analyze the impact of redistributive fiscal policies that target consumption inequality between households groups. Such policies have beneficial implications for macroeconomic stability, bringing the dynamic performance of the model close to the one generated by representative-agent DSGE models.
Creation-Date: 2014
File-URL: http://www.lancaster.ac.uk/media/lancaster-university/content-assets/documents/lums/economics/working-papers/MacroeconomicVolatility.pdf
File-Format: application/pdf
Number: 65170975
Classification-JEL: 
Keywords: limited asset market participation, DGSE, determinacy, consumption habits, income inequality, redistribution
Handle: RePEc:lan:wpaper:65170975