Bhandari, Anmol; Evans, David; Golosov, Mikhail; … - In: Econometrica 89 (2021) 6, pp. 2559-2599
We study optimal monetary and fiscal policies in a New Keynesian model with heterogeneous agents, incomplete markets, and nominal rigidities. Our approach uses small‐noise expansions and Fréchet derivatives to approximate equilibria quickly and efficiently. Responses of optimal policies to...