Each year, CEPR ranks its discussion papers by readership. Under the theme Monetary Policy & Transmission, the paper HANK Sufficient Statistics Out of Norway (HANKSSON) appears alongside three other highly read studies.Centre for Economic Policy Research (CEPR) writes the following:

"Together, these papers push the frontier on how policy actions, communication, and global shocks interact in modern monetary systems".

wide attention

The paper has attracted wide attention because it tackles a question many macroeconomists have been asking for more than 50 years.

Krisztina Molnár

In the Hanksson paper Molnár and her co-authors address a long standing question in macroeconomic research:

Do differences between households – in income, wealth, and spending behavior – make recessions deeper and recoveries stronger?

`The paper has attracted wide attention because it tackles a question many macroeconomists have been asking for more than 50 years´, says Krisztina Molnár.

She is an Associate Professor at the Department of Economics, specialising in monetary economics, including household behaviour.  

pushes the frontier

`Until now, it has not been possible to answer this question using direct evidence on households’ actual consumption choices´, Molnar adds.

By observing the key variables that shape those choices - income, transfers, taxes, and wealth - the study helps refine how economists model household heterogeneity and, ultimately, how macroeconomic policy is designed.

Many influential economic models suggest that inequality and household heterogeneity amplify economic fluctuations. The international research team (see facts) combine detailed information on income, wealth, and actual consumption for the entire Norwegian population.

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`Unlike many earlier studies, we rely on what people really spend, their debit card payments and bank transactions´ , Molnar says.

implications

The researchers find little evidence that recessions are strongly amplified through household behavior.

`One reason is that disposable income for low- and high-income households tends to move in surprisingly similar ways over the business cycle. During recessions, low-income households experience large losses in labor income, but these are partly offset by increased government transfers. High-income households, by contrast, lose less labor income but see declines in capital income and pay more in taxes´.

Unlike many earlier studies, we rely on what people really spend.

Krisztina Molnár

In principle, these different income shocks could lead to very different consumption responses. However, when the authors examine actual spending patterns, they find that consumption changes are remarkably similar across income groups.

`The implications extend beyond academic debate. Understanding how different households truly respond to recessions could reshape everything from stimulus design to tax policy, giving policymakers better tools to manage economic downturns´, Molnar says.

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