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Job Market Paper

Title: Matching Wealth Moments with Heterogeneous Returns (2025)
Authors: Decory Edwards

Abstract. This paper aims to provide further evidence of the heterogeneous agent modelling framework’s ability to match wealth moments by adding a single source of heterogeneity across households beyond the realization of ex-post shocks to their income. I allow for households differ in the return earned on assets in a setting with rich life cycle dynamics. From there, I interpret the heterogeneity in the returns on safe assets earned by households as variation in deposit rates across the banking sector (as a result of the transmissions channel of monetary policy and its effect on deposits). Lastly, I discuss the implications of various taxation schemes when heterogeneous returns are present.

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Supplementary materials (code & replication):

• Replication repository (GitHub) — code and data to reproduce the paper’s results.