This paper introduces cash transfers targeting the poor in an incomplete markets model with heterogeneous agents facing idiosyncratic risk. These transfers change the degree of insurance in the economy and aect precautionary motives asymmetrically, leading the poorest households to decrease...

Given the frequency of price changes, the real effect of a monetary shock is smaller if adjusting firms are the ones with older and, hence, more misaligned prices. This selection effect is important in a large class of sticky-price models with time-dependent price adjustment. We characterize...

We combine questions from the Michigan Survey about the future path of prices, interest rates, and unemployment to investigate whether U.S. households are aware of the so-called Taylor (1993) rule. For comparison, we perform the same analysis using questions from the Survey of Professional...