United in Diversity: A HANK2 model of currency areas
-
SeriesResearch on Monday
-
Speaker(s)Gernot Müller (Univeristy of Tuebingen, Germany)
-
FieldFinance, Macroeconomics
-
LocationErasmus University Rotterdam, Campus Woudestein, Polak 2-09
Rotterdam -
Date and time
November 28, 2022
11:30 - 12:30
Abstract
The heterogeneity of currency areas is much discussed ever since Mundell (1961). Traditionally, the focus is on heterogeneity at the macro level and the welfare costs and benefits of a common currency are assessed in terms of countries. In this paper, we
account for heterogeneity at the household level as we put forward a heterogeneous
agent New Keynesian model of two countries: HANK2. We calibrate the model to the euro area and study the transmission of country-specific shocks. The adjustment dynamics to such shocks differ across countries. Their welfare implications, however,
differ not so much across countries but across households along the wealth
To participate, please register here.