Importance of accounting for household

My research project belongs to the literature reflecting on the importance of accounting for household
heterogeneity when assessing aggregate phenomena. I am most interested in exploring the new insights that this framework is generating for monetary policy.
I already started to work jointly with professor A. Auclert on a paper which aims to evaluate the redistributive effects of unexpected inflation and their transmission to aggregate consumption. Inflation shocks have indeed different wealth effects on individual debtors and creditors, as well as on the government balance sheet and on the foreign sector position. To evaluate the size of these effects and
understand the transmission to aggregate consumption, I started to construct a new dataset with consumption expenditures and nominal positions at the household level from 1980 onwards. I plan to
merge it with data already assembled on the position of the government and the foreign sector, and then to quantify the wealth effects of inflation shocks across different agents in the economy in a
comprehensive way. I will also then measure actual households consumption responses to inflation shocks, and construct a theoretical model with heterogeneous agents matching the empirical evidence.
This model will be used to perform conterfactual simulation which, on a positive side, will enhance our understanding of the effects of monetary policy on the economy; on a normative one, they will inform
policy makers of the effects of changing inflation targets, as suggested by several authors during the Great Recession.