Transmission of Monetary Policy with Heterogeneity in Household Portfolios

This paper assesses the importance of heterogeneity in household portfolios for the transmission of monetary policy in a New Keynesian business cycle model with uninsurable income risk and assets with different liquidity. In this environment, monetary transmission works through investment, but redistribution lowers the elasticity of investment via two channels: (i) heterogeneity in marginal propensities to invest, and (ii) time variation in the liquidity premium. Monetary contractions redistribute to wealthy households who have high propensities to invest and a low marginal value of liquidity, thereby stabilizing investment. I provide empirical evidence for countercyclical liquidity premia and heterogeneity in household portfolio responses

Solving discrete time heterogeneous agent models with aggregate risk and many idiosyncratic states by perturbation

This paper describes a method for solving heterogeneous agent models with aggregate risk and many idiosyncratic states formulated in discrete time. It extends the method proposed by Reiter (2009) and complements recent work by Ahn, Kaplan, Moll, Winberry, and Wolf (2017) on how to solve such models in continuous time. We suggest first solving for the stationary equilibrium of the model without aggregate risk. We then write the functionals that describe the dynamic equilibrium as sparse expansions around their stationary equilibrium counterparts. Finally, we use the perturbation method of Schmitt‐Grohé and Uribe (2004) to approximate the aggregate dynamics of the model

Three-dimensional modelling of edge-on disk galaxies

We present detailed three-dimensional modelling of the stellar luminosity distribution for the disks of 31 relatively nearby (<= 110 Mpc) edge-on spiral galaxies. In contrast to most of the standard methods available in the literature we take into account the full three-dimensional information of the disk. We minimize the difference between the observed 2D-image and an image of our 3D-disk model integrated along the line of sight. Thereby we specify the inclination, the fitting function for the z-distribution of the disk, and the best values for the structural parameters such as scalelength, scaleheight, central surface brightness, and a disk cut-off radius. From a comparison of two independently developed methods we conclude, that the discrepancies e.g. for the scaleheights and scalelengths are of the order of ~10%. These differences are not due to the individual method itself, but rather to the selected fitting region, which masks the bulge component, the dust lane, or present foreground stars. Other serious limitations are small but appreciable intrinsic deviations of real disks compared to the simple input model. In this paper we describe the methods and present contour plots as well as radial profiles for all galaxies without previously published surface photometry. Resulting parameters are given for the complete sample.Comment: LaTeX, 25 pages, 28 figures higher quality figures available at http://www.astro.ruhr-uni-bochum.de/astro/publications/pub2000.htm

Outer edges of face-on spiral galaxies

We present deep optical imaging of three face-on disk galaxies together with a detailed description of the reduction and calibration methods used, in order to measure the intrinsic shape of their outer stellar edges. Whereas it is now well accepted that disks of spiral galaxies are not infinite exponential beyond galactocentric distances of about 3-5 radial scalelengths, the genuine structure of the truncation region is not yet well known. Our data quantitatively establish a smooth truncation behaviour of the radial surface brightness profiles and is best described by a two-slope model, characterised by an inner and outer exponential scalelength separated at a relatively well defined break radius. This result disagrees with the frequently assumed sharply truncated nature of the radial surface brightness profiles and implies the presence of stars and even star-formation beyond the break radius. In addition, we do not find a strong influence of a nearby companion on the ratio of the break radius to the radial scalelength. Our results denote new observational constraints for the search of the physical explanation for these smooth disk truncations.Comment: LaTeX, 10 pages, 17 figures, accepted to be published in A&A, minor changes to the quality of figure

The Liquidity Channel of Fiscal Policy

We provide evidence that expansionary fiscal policy lowers the return difference between more and less liquid assets—the liquidity premium. We rationalize this finding in an estimated heterogeneous-agent New-Keynesian (HANK) model with incomplete markets and portfolio choice, in which public debt affects private liquidity. In this environment, the short-run fiscal multiplier is amplified by the countercyclical liquidity premium. This liquidity channel stabilizes investment and crowds in consumption. We then quantify the long-run effects of higher public debt, and find a sizable decline of the liquidity premium, increasing the fiscal burden of debt, but little crowding out of capital

Transmission of monetary policy with heterogeneity in household portfolios

Monetary policy affects both intertemporal consumption choices and portfolio choices between liquid and illiquid assets. The monetary transmission, in turn, depends on the distribution of marginal propensities to consume and invest. This paper assesses the importance of heterogeneity in these propensities for the transmission of monetary policy in a New Keynesian business cycle model with uninsurable income risk and assets with different degrees of liquidity. Liquidity-constrained households have high propensities to consume but low propensities to invest, which makes consumption more and investment less responsive to monetary shocks compared to complete markets. Redistribution through earnings heterogeneity and the Fisher channel from unexpected inflation further amplifies the consumption response but dampens the investment response