uncertainty. In the workhorse consumption-savings model, augmented with risk heterogeneity, MPCs decline with earnings uncertainty …

uncertainty. In the workhorse consumption–savings model, augmented with risk heterogeneity, MPCs decline with earnings uncertainty …

degree of heterogeneity in household preferences or beliefs is sufficient to match empirical measures of wealth inequality in … the United States. The heterogeneity-augmented model’s predictions are consistent with microeconomic evidence that … macroeconomic models (even ones including some heterogeneity). The high MPC arises because many consumers hold little wealth despite …