Modern Macroeconomics and Heterogeneity

Modern macroeconomics has evolved from focusing just on the dynamics of aggregates, such as income, consumption and savings, to the dynamics of the distributions that add up to those aggregates. This is a consequence of theoretical contributions and increasing data availability and computational power. Though contributions regarding heterogeneity in macroeconomics can be traced back to the first half of the 20th century, it is only by the 2010s that we evolved towards a framework where there is a rich interaction between macroeconomic aggregates and their distributions that goes both ways. This special edition focused on contributions that build on such framework to study open questions regarding the impact of fiscal shocks on output, the impact of investment‑ specific technological change on inequality, optimal tax structures, and the impact of the COVID‑ 19 pandemic on the distribution of earnings.