Haok and hank models

Abstract

Accounting for and managing heterogeneities in economic agents’ preferences, information sets, and opportunities have always been central to macroeconomic theory. Long before macroeconomics existed as a distinct field, conflicts of interest preoccupied those who designed monetary-fiscal policies.1 Section 1 describes heterogeneous agent old Keynesian (HAOK) models and the reasons why distinguished twentieth-century macroeconomists used them to analyze the consequences of alternative monetary and fiscal policies. Section 2 describes how informal NBER reference cycle models created by Burns and Mitchell (1946) and single-factor descriptive statistical models, like those sketched by Koopmans (1947) and formalized by Sargent and Sims (1977), framed evidence that motivated HAOK theorists.