This study investigates whether the Federal Reserve (Fed) should care about inequality. We develop a Heterogeneous Agent New Keynesian (HANK) model, which generates empirically realistic inequalities and business cycle properties observed in the U.S. data. Households in the model economy are...

This paper investigates the quantitative implications of real wage rigidities and heterogeneity for two long-lasting puzzles in the business cycles literature: the low correlation between total hours worked and labor productivity and the large volatility of the labor wedge, defined as a gap...

This study investigates the welfare effects of business cycle fluctuations from distributional perspectives. To this end, we develop a quantitative heterogeneous-agent model which incorporates market incompleteness and non-convexity into the mapping from the time devoted to work to labor...

This study investigates the relation between monetary policy and income inequality by asking how one affects the other: the effect of monetary policy on income inequality and the impact of the long-run level of income inequality on the effectiveness of monetary policy. To this end, I build a...

This paper focuses on a labor-supply-side story for the monetary transmission mechanism, which has received relatively little attention in the New Keynesian literature. To this end, I develop a heterogeneous-agent New Keynesian (HANK) economy where a nonlinear mapping from hours worked into...

The U.S. economy shows a contrasting difference in cyclical properties between low- and high-income groups. Income shares of the bottom three income quintiles are procyclical; while those of the next 35 percent are countercyclical. However, the income share of the very top five percent income...