Season 1 · Episode 350
HANK or RANK – how monetary policy works, or doesn’t
New Keynesians assume the role of one representative agent in their models. But what if we don't all behave the same?
Debunking Economics - the podcast · Steve Keen & Phil Dobbie
May 10, 202338m 30s
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Show Notes
New Keynesian economists have accepted that their HANK model, which models the behaviour of one representative agent, doesn’t explain the outcomes on different income groups. As we know, the latest rate rises are having a more profound impact on income variation. Steve says their models don’t work because they don’t realise the distribution of income. The answer , according to the new Keynsians, is to assume a HANK model, which allows for heterogeneity, with different consumer groups behaving in different way, dependent on their income and wealth. Is this a step forward, or a band aid on a flawed concept?
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