Nastasia Henry*, Ulrich Aiounou**

Internal seminars
phd seminar

Nastasia Henry*, Ulrich Aiounou**

Should the helicopter fly? When inequalities matter*
A nonlinear Gegenbauer model to describe output and unemployment rates in the G7 countries**
Joint with
Gilles Dufrénot**

IBD Amphi

Îlot Bernard du Bois - Amphithéâtre

5-9 boulevard Maurice Bourdet
13001 Marseille

Tuesday, February 6 2024| 11:00am to 12:15pm

Lucie Giorgi: lucie.giorgi[at]
Ricardo Guzman: ricardo.guzman[at]
Natalia Labrador: natalia.labrador-bernate[at]
Nathan Vieira: nathan.vieira[at]


*Can unconventional monetary policy reduce income and wealth inequalities, across and within countries? Achieving a state with less inequalities is an objective pursued by almost all governments. Central Banks may also pursue this objective, as inequalities can shape the transmissions and thus the impacts of monetary policy. In this present paper, I gauge the redistributive effects of an unconventional monetary policy: Helicopter Money (Friedman, 1969), in the euro area. I analyse whether Helicopter Money has an impact on inequalities across and within Eurozone countries, at a time when the zone experienced strong macroeconomic imbalances between its members. How does a common monetary policy transmit in a heterogeneous currency area? To do so, I build a two-country Heterogeneous Agent New Keynesian (HANK) model, with two layers of heterogeneity: across agents and countries. Considering different levels of public debt and interest rates allows me to replicate macroeconomic imbalances in the zone, between core and peripheral countries.  The next step will be to estimate a Bayesian Vector Autoregression (BVAR) model with Eurozone data.

**This paper proposes a new model for modelling unemployment rate dynamics in the G7 countries as a function of the business cycle while taking account of the hysteresis phenomena highlighted in the theoretical literature. Our contribution is econometric, both theoretically and empirically.