Inequality in 3D – measurement and

implications for macroeconomic theory

Fact Sheet

Project Information

3D-In-Macro Funded under

H2020-EU.1.1.
Grant agreement ID: 851891
Overall budget
Start date End date € 1 376 875
1 May 2020 30 April 2025
EU contribution
€ 1 376 875

Hosted by
STIFTELSEN
HANDELSHOYSKOLEN BI
  Norway

Project description
Towards a better understanding of the forces behind growing
inequality

The EU-funded project 3D-In-Macro aims to contribute towards a better

understanding of inequality and its macroeconomic implications. Using microdata,
the project members will study the economy down to the household level along three
important dimensions: consumption, income and wealth. The overarching aim of the
project is to quantify the type of micro-heterogeneity that matters for macroeconomic
theory and thus assist in the development of current and future macroeconomic
models. Furthermore, a better understanding of the forces behind growing inequality
may provide input to the current active debates on the issue, both within academia
and among policy makers.
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Objective
This project will contribute toward a better understanding of inequality and its
macroeconomic implications. We will study inequality and its dynamics along three
dimensions: Consumption, Income and Wealth, “3D Inequality.” With novel
microdata we can measure the entirety of the economy down to the single household
along the 3 dimensions.
In macroeconomics, much theoretical progress has been made in understanding
when distributions matter for aggregates. Newer heterogeneous agent models
deliver strikingly different implications for monetary and fiscal policies than what the
traditional representative agent models do, and also allow us to study the
distributional implications of different policies across households. In principle, this
class of models can incorporate the potentially rich interactions between inequality
and the macroeconomy: on the one hand, inequality shapes macroeconomic
aggregates; on the other hand, macroeconomic shocks and policies affect inequality.
However, absent precise micro-level facts it is difficult to establish which of the
potential mechanisms highlighted by these models are the most important in reality.
Our empirical efforts will be disciplined by these recent developments in modelling
macroeconomic phenomena with microeconomic heterogeneity. Our overarching
motivation is to quantify the type of micro heterogeneity that matters for
macroeconomic theory and thereby inform the development of current and future
macroeconomic models. The novel insights we aim to provide could lead to
substantial improvements in both fiscal and monetary policy tools. Furthermore, a
better understanding of the forces behind growing inequality will inform the current
debate on this issue and provide important lessons to policy makers who see
economic inequality as a problem in itself.

Fields of science

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Programme(s)

Topic(s)

Call for proposal

ERC-2019-STG

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Funding Scheme

ERC-STG - Starting Grant

Host institution

STIFTELSEN HANDELSHOYSKOLEN BI

Address Activity type EU contribution
Nydalsveien 37 Higher or Secondary € 1 376 875
0484 Oslo Education Establishments
  Norway

Contact the organisation 

Beneficiaries (1)

STIFTELSEN HANDELSHOYSKOLEN BI

  Norway
EU contribution
€ 1 376 875

Address Activity type

Nydalsveien 37 Higher or Secondary
0484 Oslo Education Establishments

Contact the organisation 

Last update: 4 May 2020

Record number: 229369

Permalink: https://cordis.europa.eu/project/id/851891

© European Union, 2021

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