Monetary Policy in a Non-Representative Agent Economy: A Survey

National Bank of Poland Working Paper No. 95

53 Pages Posted: 20 Sep 2011 Last revised: 8 Jul 2016

See all articles by Michal Brzoza-Brzezina

Michal Brzoza-Brzezina

National Bank of Poland; Warsaw School of Economics (SGH)

Marcin Kolasa

National Bank of Poland; Warsaw School of Economics (SGH)

Grzegorz Koloch

National Bank of Poland; Warsaw School of Economics

Krzysztof Makarski

National Bank of Poland; Warsaw School of Economics (SGH)

Michał Rubaszek

National Bank of Poland; Warsaw School of Economics (SGH)

Multiple version iconThere are 2 versions of this paper

Date Written: September 1, 2011

Abstract

It is well-known that central bank policies affect not only macroeconomic aggregates, but also their distribution across economic agents. Similarly, a number of papers demonstrated that heterogeneity of agents may matter for the transmission of monetary policy on macro variables. Despite this, the mainstream monetary economics literature has so far been dominated by dynamic stochastic general equilibrium (DSGE) models with representative agents. This article aims to tilt this imbalance towards heterogeneous agents setups by surveying the main positive and normative findings of this line of the literature, and suggesting areas in which these models could be implemented. In particular, we review studies that analyze the heterogeneity of households’ income, households’ preferences, consumers’ age, expectations, and firms’ productivity and financial position. We highlight the results on issues that, by construction, cannot be investigated in a representative agent framework and discuss important papers modifying the findings from the representative agent literature.

Keywords: heterogeneous agents, monetary policy

JEL Classification: E31, E32, E43, E44, E52

Suggested Citation

Brzoza-Brzezina, Michal and Kolasa, Marcin and Koloch, Grzegorz and Makarski, Krzysztof and Rubaszek, Michal, Monetary Policy in a Non-Representative Agent Economy: A Survey (September 1, 2011). National Bank of Poland Working Paper No. 95. Available at SSRN: https://ssrn.com/abstract=1930846 or http://dx.doi.org/10.2139/ssrn.1930846

Michal Brzoza-Brzezina (Contact Author)

National Bank of Poland ( email )

00-919 Warsaw
Poland

Warsaw School of Economics (SGH)

aleja Niepodleglosci 162
PL-Warsaw, 02-554
Poland

Marcin Kolasa

National Bank of Poland ( email )

00-919 Warsaw
Poland

Warsaw School of Economics (SGH) ( email )

aleja Niepodleglosci 162
PL-Warsaw, 02-554
Poland

Grzegorz Koloch

National Bank of Poland ( email )

00-919 Warsaw
Poland

Warsaw School of Economics

aleja Niepodleglosci 162
PL-Warsaw, 02-554
Poland

Krzysztof Makarski

National Bank of Poland ( email )

00-919 Warsaw
Poland

Warsaw School of Economics (SGH)

aleja Niepodleglosci 162
PL-Warsaw, 02-554
Poland

Michal Rubaszek

National Bank of Poland ( email )

00-919 Warsaw
Poland

Warsaw School of Economics (SGH) ( email )

aleja Niepodleglosci 162
PL-Warsaw, 02-554
Poland

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