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Difference between homogeneous and heterogeneous agent model

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Suppose that an increase in people's expected inflation rate in the coming year would deduce their demand for money. How would a shock to the expected inflation affect output and the price level in the short run and in general equilibrium?

What is the difference between homogeneous-agent models and heterogeneous-agent models? Which do you think is more realistic? Which do you think are more difficult to work with because it is technically more complicated?

Reference no: EM13892886

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