Distributional Effects of Monetary Policies in a New Neoclassical Model with Progressive Income Taxation

Burkhard Heer; Alfred Maussner ()
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Burkhard Heer; Alfred Maussner: School of Economics and Management Free University of Bolzano-Bozen
Authors registered in the RePEc Author Service: Alfred Maussner () and Burkhard Heer

No 12, Computing in Economics and Finance 2005 from Society for Computational Economics

Abstract: In our dynamic optimizing sticky price model, agents are heterogenous with regard to their assets and their income. Unanticipated inflation redistributes income and wealth. In order to model the wealth distribution, we study a 60-period OLG model with aggregate uncertainty. A positive technology shock increases the concentration of wealth as measured by the Gini coefficient considerably. In particular, a one percent increase of the technology level results in a one percent increase of the Gini coefficient. An unexpected expansionary monetary policy is found to reduce the inequality of the wealth distribution. In addition, we find that the business cycle dynamics in the OLG model in response to both a technology shock and a monetary shock are different from those in the corresponding representative-agent model

Keywords: Distribution Effects; Unanticipated Inflation; Heterogeneous Agents (search for similar items in EconPapers)
JEL-codes: E31 E32 E52 (search for similar items in EconPapers)
Date: 2005-11-11
New Economics Papers: this item is included in nep-dge, nep-mac and nep-mon
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: THE BURDEN OF UNANTICIPATED INFLATION: ANALYSIS OF AN OVERLAPPING-GENERATIONS MODEL WITH PROGRESSIVE INCOME TAXATION AND STAGGERED PRICES (2012)
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