DFG Project (No. 510995673)

"Fiscal Policy in Models with Heterogeneous Agents"

The most commonly used models for analyzing fiscal policy measures are based on representative agent models. The financial crisis in 2008 and the impacts of the ongoing COVID-19 crisis have demonstrated the drawbacks of this simplified approach to the analysis of government interventions and modeling business cycles. Moreover, further inequalities became apparent during the COVID-19 crisis, which cannot be modeled by the current work horse models in macroeconomics. The research project aims to develop new macroeconomic models and solution methods that allow taking distributional consequences into account. Such heterogeneous agent models can contribute to quantifying the effects of policy measures and identifying new channels of action.