Economic Brief

April 2012, No. 12-04

The Spice of Life: Allowing for Heterogeneity in Macro Models

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Macroeconomic models often make simplifying assumptions that suppress differences between people. Changing these assumptions and allowing for "heterogeneity" can enrich analysis of both observed data and policy tradeoffs. Modern macroeconomics has made significant progress in this area, sometimes significantly altering economists' views and policy prescriptions.

Additional Resources

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