Search Results
Report
Heterogeneous Agent Trade
This paper studies the implications of household heterogeneity for trade. I develop a model where household heterogeneity is induced via incomplete markets and results in heterogeneous price elasticities. Conditional on exposure to trade, heterogeneous price elasticities imply that different households value price changes differently, and thus rich and poor households experience different gains from trade. I calibrate the model to match bilateral trade flows and micro-facts about household-level expenditure patterns and elasticities. I find gains from trade that are pro-poor and that the ...
Working Paper
Computing Aggregate Fluctuations of Economies with Private Information
This paper introduces a general method for computing aggregate fluctuations in economies with private information. Instead of the cross-sectional distribution of agents across individual states, the method uses as a state variable a vector of spline coefficients describing a long history of past individual decision rules. The model is then linearized with respect to that vector. Applying the computational method to a Mirrlees RBC economy with known analytical solution recovers the solution perfectly well. This test provides significant confidence on the accuracy of the method.