## Abstrakt

I introduce a method for simulating aggregate dynamics of heterogeneous-agent models where log permanent income follows a random walk. The idea is to simulate the model using a counterfactual permanent-income-neutral measure which incorporates the effect that permanent income shocks have on macroeconomic aggregates. With the permanent-income-neutral measure, one does not need to keep track of the permanent-income distribution. The permanent-income-neutral measure is both useful for the analytical characterization of aggregate consumption-savings behavior and for simulating numerical models. Furthermore, it is trivial to implement with a few lines of code.

Originalsprog | Engelsk |
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Artikelnummer | 104185 |

Tidsskrift | Journal of Economic Dynamics and Control |

Vol/bind | 129 |

Antal sider | 27 |

ISSN | 0165-1889 |

DOI | |

Status | Udgivet - aug. 2021 |