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Cited by 117Economic theories and modelsEconomic Theory and PolicyComplex Systems and Time Series Analysis

The DOI matches its Crossref record; 58 of the 58 references it cites were found in a registry or an index.

The Marginal Propensity to Consume in Heterogeneous Agent Models

Kaplan, Greg, Violante, Giovanni L.·2022·Annual Review of Economics
DOI 10.1146/annurev-economics-080217-053444
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Abstract

What model features and calibration strategies yield a large average marginal propensity to consume (MPC) in heterogeneous agent models? Through a systematic investigation of models with different preferences, dimensions of ex-ante heterogeneity, income processes, and asset structures, we show that the most important factor is the share and type of hand-to-mouth households. One-asset models either feature a trade-off between a high average MPC and a realistic level of aggregate wealth or generate an excessively polarized wealth distribution that vastly understates the wealth held by households in the middle of the distribution. Two-asset models that include both liquid and illiquid assets can resolve this tension with a large enough gap between liquid and illiquid returns. We discuss how such return differential can be justified from the perspective of theory and data.

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Research works printed but not linked: 3

  1. 10.2139/ssrn.3578410 · DOI
  2. 10.3386/w8496 · DOI
  3. 10.1257/mac.20190211 · DOI

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Metadata

Authors
Kaplan, G., & Violante, G. L.
Affiliations
  • National Bureau of Economic Research (US)
  • University of Copenhagen (DK)
Venue
Annual Review of Economics
Publisher
Annual Reviews
Published
2022-08-12
Volume
14
Issue
1
Pages
747-775
ISSN
  • 1941-1383 (ISSN-L)
  • 1941-1391
DOI
10.1146/annurev-economics-080217-053444
OpenAlex
W4290851807
Cited by
116
References
58
Citations by year
2026: 18 · 2025: 30 · 2024: 35 · 2023: 24 · 2022: 8
FWCI
4.49
Type
journal article
Language
en
Open access
closed
Locations
Annual Review of Economics (publishedVersion)
Topics
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic theories and models
  • Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Economic Theory and Policy
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Complex Systems and Time Series Analysis
Keywords
marginal propensity to consume, heterogeneous agent model, hand-to-mouth households, wealth distribution, model calibration, household preferences, aggregate wealth, return differentials

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