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Analyzing fiscal policies in a heterogeneous-agent overlapping-generations economy

Research output: Contribution in Book/Report/Proceedings - With ISBN/ISSNChapter (peer-reviewed)peer-review

Published
Publication date02/2014
Host publicationHandbook of Computational Economics
EditorsKarl Schmedders, Kenneth Judd
PublisherElsevier
Pages117-160
Number of pages44
Volume3
ISBN (print)1574-0021
<mark>Original language</mark>English

Abstract

The overlapping generations (OLG) life-cycle model with heterogeneous agents has become the main workhorse for evaluating the welfare and macroeconomic effects of major fiscal policy changes, including reforms to tax and social insurance systems. This chapter shows how to construct and solve a OLG model with idiosyncratic shocks, which allows for analyzing the inter- and intra-generational welfare and macroeconomic impact of policy changes.