Macroeconomics Seminar Series. Heterogeneous Households and Aggregate Dynamics: Analytical Moment Recursion
Published: 8 October 2025
16 October 2025. Dr Hanbaek Lee, University of Cambridge
Dr Hanbaek Lee (University of Cambridge)
Heterogeneous Households and Aggregate Dynamics: Analytical Moment Recursion
Thursday, 16 October 2025, 15:00–16:30
Room 386AB, Adam Smith Business School
Abstract
This paper develops an analytical framework for heterogeneous-household economies with idiosyncratic labor productivity and wealth returns, integrating growth and business cycle dynamics. I establish the existence of moment-recursive competitive equilibrium (MRCE), in which aggregate dynamics are fully characterized by aggregate capital and the covariances between wealth and idiosyncratic states. The framework yields three key insights: (i) distributional covariances generate state-dependent aggregate dynamics through novel channels; (ii) idiosyncratic return risks are priced through their covariance with wealth; (iii) equilibrium allocations are invariant to household beliefs about aggregate endogenous dynamics. This analytical approach enables integrated study of growth, business cycles, inequality, and their interactions within a unified framework.
Biography
Dr. Hanbaek Lee's research focuses on the macroeconomic implications of micro-level heterogeneity and their policy implications. His research area covers business cycle, firm dynamics, inequality, and computational methodologies. He earned his Ph.D. in Economics from the University of Pennsylvania in 2021.
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First published: 8 October 2025
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