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Economics & Finance Seminar: Ralph Lütticke (UCL)

Venue: Birkbeck Main Building, Malet Street

No booking required

The Department of Economics, Mathematics and Statistics holds seminars in economics and finance most Wednesdays during term time from 12pm to 1pm in Room 745, Malet Street Building (unless otherwise stated). Presentations are given by staff or invited external speakers.


Ralph Lütticke  (UCL)
"Shocks, Frictions, and Inequality in US Business Cycles"

Abstract: In how far does inequality matter for the business cycle and vice versa? Using a Bayesian likelihood approach, we estimate a heterogeneous-agent New-Keynesian (HANK) model with incomplete markets and portfolio choice between liquid and illiquid assets. The model enlarges the set of shocks and frictions in Smets&Wouters (2007) by allowing for shocks to income risk and portfolio liquidity. We find income risk to be an important driver of output and consumption. This makes US recessions more demand driven relative to the otherwise identical complete markets benchmark (RANK). The HANK model further implies that business cycle shocks and policy responses have significantly contributed to the evolution of US wealth and income inequality.

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