Distributional Implications of a High Inflation, High Interest Rate Environment

The global trend towards opening up administrative data sources to research, advances in computing power, and statistical analysis techniques are fostering interest in large-scale simulation methods by policymakers, who increasingly require addressing the distributional consequences of policies as a standard element of impact assessment. Using data provided by the Austrian Micro Data Center (AMDC) allows us to develop an agent-based model (ABM) that represents the financial conditions of firms and households with an unprecedented degree of granularity and empirical realism, that is unmatched by existing macroeconomic models. This project is thus an important step towards creating a "digital twin" of an economy that can be used to assess the distributional impact of economic policies and contributes to the research on monetary policy and inequality that has traditionally focused on household income.