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A. Grimaud:
"Learning and supply shocks in a HANK economy";
Vortrag: 27th International Conference Computing in Economics and Finance, Tokyo, Japan; 16.06.2021 - 18.06.2021.

This paper revisits monetary policy in a heterogeneous agents new Keynesian model
where agents use adaptive learning (AL) in order to form their expectations. Due to
the households´ finite heterogeneity triggered by idiosyncratic unemployment risk, the
model is subject to micro-founded heterogeneous expectations that are not anchored to
the rational expectation path. Households experience different histories which has nontrivial consequences on their individual AL processes. In this model, supply shocks
generate precautionary saving and possible long-lasting disinflationary traps associated with excess saving. Dovish policies focused on closing the output gap dampen
the learning effects which is in contradiction with previously established representative
agent under learning results. Price level targeting appears to resolve most of the problem by better anchoring long run expectations of future utility flows

Adaptive learning, supply shocks, heterogeneous expectations, HANK , price level targeting.

https://publik.tuwien.ac.at/files/publik_298969.pdf