NBER paper seeks ‘canonical Hank model’
Early attempts at heterogeneous agent modelling led to implausible results, authors say
Researchers have attempted to write down a “canonical” heterogeneous agent New Keynesian (Hank) model, synthesising more than a decade of research in the area.
In the working paper, published by the National Bureau of Economic Research, Adrien Auclert, Matthew Rognlie and Ludwig Straub aim to overcome drawbacks in some of the earlier attempts at Hank modelling. They note many Hank models follow the standard New Keynesian approach of sticky prices, which interacts with heterogeneity to produce
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