Kim, Yongsoo;
(2025)
Essays on Macroeconomics with Heterogeneous
Agents.
Doctoral thesis (Ph.D), UCL (University College London).
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Abstract
This thesis comprises three independent essays. Chapter 1 examines a new type of risk that creates unavoidable expenditure needs. Using data from the Panel Study of Income Dynamics, I show that financially constrained households face greater difficulty in increasing consumption of goods affected by expenditure shocks and tend to make larger reductions in other spending categories. I develop a heterogeneous agent New Keynesian model with incomplete markets, which predicts that expenditure risks reshape wealth distribution and marginal propensities to consume, compared to standard models. Policy simulations reveal that redistributive fiscal policies are more effective in stimulating the economy under expenditure risks but are less welfare-enhancing in the long run due to general equilibrium effects. Chapter 2 builds a HANK model to study the effects of the furlough scheme implemented in the UK during the COVID-19 pandemic. To model lockdowns, I introduce inactivity shock which generates a state of neither employment nor complete unemployment. The model shows that inactivity shocks have recessionary effects on the economy. While the furlough scheme effectively mitigates declines in aggregate demand, its overall impact is partially offset by higher tax rates required to finance the policy. The results suggest that the furlough scheme provides benefits to those directly affected by the pandemic. Chapter 3 examines the effects of sector-specific job separation shocks on labor reallocation and macroeconomic dynamics using a two-sector heterogeneous agent New Keynesian model with discrete labor choices. In response to a separation shock, we find that the model produces puzzling results: the directly affected sector experiences a milder recession and faster recovery due to increased labor demand, while the indirectly affected sector suffers a deeper recession caused by negative demand effects. These findings suggest that incorporating additional mechanisms is necessary to better capture observed economic patterns.
| Type: | Thesis (Doctoral) |
|---|---|
| Qualification: | Ph.D |
| Title: | Essays on Macroeconomics with Heterogeneous Agents |
| Open access status: | An open access version is available from UCL Discovery |
| Language: | English |
| Additional information: | Copyright © The Author 2025. Original content in this thesis is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International (CC BY-NC 4.0) Licence (https://creativecommons.org/licenses/by-nc/4.0/). Any third-party copyright material present remains the property of its respective owner(s) and is licensed under its existing terms. Access may initially be restricted at the author’s request. |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL SLASH UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics |
| URI: | https://discovery.ucl.ac.uk/id/eprint/10207868 |
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