-simulations to investigate heterogeneity in the euro area. We quantify shocks to wealth, income and financial pressure faced by … affected the income-poor, while the declining wealth the income-rich. Although borrowers benefited from the substantial … decrease in interest rates, debt service-income and debt-income ratios for poor households went up as they faced falling …

stock' model of optimal consumption in the presence of labor income uncertainty and credit constraints. Saving in the model …

A large body of microeconomic evidence supports Friedman (1957)'s proposition that household income can be reasonably … model of Krusell and Smith (1998) to accommodate such a microeconomic income process. Our incorporation of substantial … permanent income shocks helps our model to explain a substantial part of the large degree of empirical wealth heterogeneity that …

permanent income shocks we then study how cross-country differences in the wealth distribution and household income dynamics … households has little wealth, (ii) under larger transitory income shocks and (iii) when we consider households only using liquid …

We present a macroeconomic model calibrated to match both microeconomic and macroeconomic evidence on household income …

composition of their income and on the components of their wealth. We first review the existing evidence on how monetary policy … affects income and wealth inequality. We then illustrate quantitatively how various channels of transmission - net interest … rate exposure, intertemporal substitution and indirect income channels - affect individual euro area households. We find …