Platzer, Josef; Peruffo, Marcel - 2022
We develop a heterogeneous agent, overlapping generations model with nonhomothetic preferences that nests several … productivity growth, a rise in income inequality, and public policy. The model can account for a 2.2 percentage point (pp) decline … compared with the postwar path of r* implied by the model. This remains true even if we take into account soaring public debt …