People are Different: A Partial Bibliography

"Turns Out People Are Different, Say Economists" is the title of Brendan Greeley's new article at BloombergBusinessweek. He writes that "the idea that different families respond differently to the same event—that households are heterogeneous—is a relatively new way of looking at the economy." This claim prompted an interesting Twitter discussion about the origins and acceptance of heterogeneous agent economics and the relevance of this literature to policymakers.

The discussion prompted me to create a (very incomplete) bibliography of heterogeneous agent literature. I've separated it into Recent Papers, Classics, and Remarks by Policymakers. I will add to it as I come across or remember other papers. I will also add papers that people suggest via the comment section or Twitter.

Recent Papers

Heterogeneous Consumers and Fiscal Policy Shocks, by Emily Anderson, Atsushi Inoue, and Barbara Rossi (2013)

"unexpected fiscal shocks have substantially different effects on consumers depending on their age, income levels, and education. In particular, the wealthiest individuals tend to behave according to the predictions of standard RBC models, whereas the poorest individuals tend to behave according to standard IS-LM (non-Ricardian) models, due to credit constraints."

Household Balance Sheets, Consumption, and the Economic Slump by Atif R. Mian, Kamalesh Rao and Amir Sufi (2013)

"the 2007-09 housing collapse in the United States resulted in a very unequal distribution of wealth shocks due to the geographical concentration of ex-ante leverage and house price decline. We investigate the consumption consequences of these wealth shocks and show that the consumption risk-sharing hypothesis is easily rejected."

Is deregulating firm entry good for the workers? Which workers? by Ana P Fernandes, Priscila Ferreira, and L Alan Winters (2013):

"deregulating firm entry appears to boost competition and employment (and possibly aggregate income) but its gains seem largely to be reaped by better-off, better-educated workers."

Fiscal Policy and Consumption, by Tullio Jappelli and Luigi Pistaferri (2013)
"A different type of experiment is a balanced-budget redistributive policy whereby the government finances a transfer to the poor by taxing the top 10% of the income distribution. With a homogeneous marginal propensity to consume, a pure redistributive policy has no effect on aggregate consumption. However, with a heterogeneous marginal propensity to consume, the effect is positive and highest if the programme targets the very poor."

Inflation and the Price of Real Assets, by Monika Piazzesi and Martin Schneider (2012)

"This paper develops an asset pricing model with heterogeneous agents and incomplete markets to study the 1970s. The key elements of the model are that households differ by age and wealth and that all credit is nominal, so that inflation matters for bond returns and the cost of borrowing. Our empirical strategy is based on the idea that micro data on household characteristics can be used to directly parametrize household sector asset demand."

Monetary Policy with Heterogeneous Agents, by Nils Gornemann, Keith Kuester, and Makoto Nakajima (2012)

"monetary policy shocks have strikingly different implications for the welfare of different segments of the population. While households in the top 5 percent of the wealth distribution benefit slightly from a contractionary monetary policy shock, the bottom 5 percent would lose from this measure"

Using Agent-Based Models for Analyzing Threats to Financial Stability, by Richard Bookstaber (2012)

"Agent-Based Models...can make an important contribution to our understanding of potential vulnerabilities and paths through which risks can propagate across the financial system." (HT David Ballard)

Center for Economic Studies, U.S. Census Bureau Working Papers, Various Authors and Years

A collection of papers addressing macro questions with microdata (HT Ryan Decker)

Classics

Income and Wealth Heterogeneity in the Macroeconomy, by Per Krusell and Anthony A. Smith, Jr (1998)

"Among the models we study, those that come the closest to matching real-world wealth distributions are precisely models with heterogeneous preferences and incomplete markets."

Asset Pricing with Heterogeneous Consumers, by George M. Constantinides and Darrell Duffie (1996)

"a potential source of the equity premium is the covariance of the securities' returns with the cross-sectional variance of individual consumers' consumption growth."

Remarks by Policymakers

Inflation Expectations and Inflation Forecasting, speech by Ben Bernanke (2007)

"median measures of inflation expectations often obscure substantial cross-sectional dispersion of expectations. On which measure or combination of measures should central bankers focus to assess inflation developments and the degree to which expectations are anchored?"