This paper discusses a series of Monte Carlo experiments designed to evaluate the empirical properties of heterogeneous-agent macroeconomic models in the presence of sampling variability. The calibration procedure leads to the welfare analysis being conducted with the wrong parameters. The...

The desirability, efficacy, and cost-effectiveness of government welfare policies depend crucially on the income risk that households face and the actions that they can take to reduce consumption fluctuations, for instance by adjusting their saving and labor supply. Shocks to labour earnings are...

We measure the heterogeneous welfare effects of the recent inflation surge across households in the Euro Area. A simple framework illustrating the numerous channels of the transmission mechanism of surprise inflation to household welfare guides our empirical exercise. By combining micro data and...