A software tool for the Bayesian estimation of Heterogeneous Agent macroeconomic policy models

My ERC-CoG project has advanced the methodological frontier in solving and estimating macroeconomic equilibrium models, enabling analysis of the interplay between business cycles and inequality. To transform this innovation into a benefit for society, policymakers must be able to work with models with ease.

This will allow them to comprehend how the policies they propose impact both the macroeconomy and income/wealth distribution. For this purpose, policymakers require a software tool that allows for swift development and analysis of models.

The ERC-CoG-funded research has produced a pilot software that can theoretically achieve this, alongside fundamental methodological research.

However, it lacks the versatility and user-friendliness required by policymakers who must develop answers to policy questions under time pressure.

The aims of the BASEforHANK project include the further development of the pilot software into a more user-friendly and versatile tool.

If successful, this development will enable policymakers worldwide to understand the impacts of their policies better, resulting in more socially cohesive and stable growth.

The development follows the model of the Dynare software package, which made it possible to use macroeconomic equilibrium models with representative agents that are now pervasive in policy institutions.