The U.S. economy shows a contrasting difference in cyclical properties between low- and high-income groups. Income shares of the bottom three income quintiles are procyclical; while those of the next 35 percent are countercyclical. However, the income share of the very top five percent income...

It is well-known that real wages are procyclical conditional on a monetary policy shock. This paper challenges this conventional view by using a quantitative heterogeneous-agent New Keynesian economy with sticky wages. In the model with benchmark calibration, the wage rate per effective unit of...

Government spending shocks have substantially different effects on consumers across the income distribution: consumption increases for the poor whereas it decreases for the rich in response to a rise in government expenditure. I shed light on this issue by incorporating a progressive tax scheme...