Crisis Propagation in a Heterogeneous Self-Reflexive DSGE Model

We study a self-reflexive DSGE model with heterogeneous households, aimed at characterising the impact of economic recessions on different strata society. Our framework allows to analyse combined effect income inequalities and confidence feedback mediated by social networks. By varying parameters model, we find crisis typologies: loss may propagate mostly within high or low rather sharp crossover between two. that crises are more severe for segregated networks (where is essentially agents same class), which cascading contagion effects stronger. For reason, larger tend reduce, in our probability global crises. Finally, able reproduce perhaps counter-intuitive empirical finding: countries higher Gini coefficients, consumption lowest households tends drop less than highest incomes times.