European Central Bank embraces Macroeconomics with Heterogeneous Consumers

In 1998 Per Krusell, a professor at Stockholm University (and regular visitor to Yale University), and Tony Smith, a professor at Yale University, developed a tractable macroeconomic model that departed from the usual assumption that all consumers are identical. In the aftermath of the Great Recession, this model has attracted the attention of the European Central Bank as it attempts to evaluate the effects of fiscal stimulus and austerity in a world in which the rich and the poor behave differently…. Read the entire story on BloombergBusinessweek