Karl Harmenberg

• Boppart, Timo; Harmenberg, Karl; Hassler, John; Krusell, Per & Olsson, Jonna Sofia Kristina (2025). Integrated Epi-Econ Assessment: Quantitative Theory. Quantitative Economics. ISSN 1759-7323. 16(1), p. 89–131. doi: 10.3982/QE2430. Full text in Research Archive
• Broer, Tobias; Druedahl, Jeppe; Harmenberg, Karl & Öberg, Erik (2025). The Unemployment-Risk Channel in Business-Cycle Fluctuations. International Economic Review. ISSN 0020-6598. p. 1–34. doi: 10.1111/iere.12773. Full text in Research Archive Show summary

  The unemployment-risk channel (URC) amplifies an initial contraction through a reduction in consumption demand by workers who fear unemployment. Crucial for this are the dynamics of job separations and firm hiring. In US data, the job-finding rate responds slower to identified macroeconomic shocks than the separation rate, but accounts for a similar share of the unemployment response. We calibrate a tractable heterogeneous-agent new-Keynesian model with endogenous separations and sluggish vacancy creation to match these facts. The share of output fluctuations due to the URC is twice as large as in a standard model with exogenous separations and free entry.

• Harmenberg, Karl (2024). A simple theory of Pareto-distributed earnings. Economics Letters. ISSN 0165-1765. 234, p. 1–3. doi: 10.1016/j.econlet.2023.111492. Full text in Research Archive Show summary

  I introduce a simple model which endogenously generates a Pareto distribution in top earnings. Workers inhabit different niches, and the earnings of a worker is determined by the niche-specific supply of labor and a downward-sloping labor demand curve. The highest paid workers are the ones that inhabit a niche with few other workers. A Pareto tail in earnings emerges as long as the labor demand curve has a limit elasticity and the distribution of workers over niches satisfies a regularity condition from extreme-value theory, satisfied by virtually all continuous distributions in economics.

• Harmenberg, Karl (2024). Comments on Markus Sigonius: Develop­ments of auto­matic stabilisers in Sweden 1998–2022. Nordic Economic Policy Review. ISSN 1904-4526. doi: 10.6027/nord2024-001. Full text in Research Archive
• Broer, Tobias; Harmenberg, Karl; Krusell, Per & Öberg, Erik (2023). Macroeconomic dynamics with rigid wage contracts. American Economic Review: Insights (AER). ISSN 2640-205X. 5(1), p. 55–72. doi: 10.1257/aeri.20210672. Full text in Research Archive Show summary

  We adapt the wage contracting structure in Chari (1983) to a dynamic, balanced-growth setting with recontracting as in Calvo (1983). The resulting wage-rigidity framework dampens income effects in the short run, thus allowing significant responses of hours to aggregate shocks. In reduced form, the model dynamics are similar to that in Jaimovich and Rebelo (2009), with their habit parameter replaced by our probability of wage-contract resetting. That is, if wage contracts are reset frequently, labor supply behaves in accordance with King, Plosser, and Rebelo (1988) preferences, whereas if they are never reset, we obtain the setting in Greenwood, Hercowitz, and Huffman (1988).

• Boppart, Timo; Harmenberg, Karl; Krusell, Per & Olsson, Jonna (2022). Integrated epi-econ assessment of vaccination. Journal of Economic Dynamics and Control. ISSN 0165-1889. 140. doi: 10.1016/j.jedc.2022.104308. Full text in Research Archive Show summary

  Using an integrated epi-econ model, we compute the value of vaccines for Covid-19, both under a planner’s solution and in competitive equilibrium. The specific model, developed in Boppart, Harmenberg, Hassler, Krusell, and Olsson (2020), factors in not just value-of-life aspects along with standard economic variables but also the value of leisure activities that rely on a social component. We find that the societal value of vaccination is large; we estimate that, translated into monetary terms, the value of vaccinating one young individual in the competitive equilibrium is $17,800. Externalities are large: less than half the societal value is internalized by individuals (assuming that they act purely in their self-interest). Finally, behavioral responses are important, with a substantial share of the value of vaccines being attributed to people enjoying more socially-oriented leisure when more people are vaccinated.

• Harmenberg, Karl & Öberg, Erik (2021). Consumption dynamics under time-varying unemployment risk. Journal of Monetary Economics. ISSN 0304-3932. 118, p. 350–365. doi: 10.1016/j.jmoneco.2020.10.004. Full text in Research Archive Show summary

  In response to an adverse labor-market shock, a calibrated heterogeneous-agent model predicts that aggregate spending on durable goods falls mainly due to the ex-ante increase in income uncertainty caused by higher unemployment risk. In contrast, aggregate spending on nondurable goods falls mainly due to the ex-post income losses associated with realized unemployment spells. When households hold little liquid assets, the nondurable spending response is amplified, whereas the durable spending response is dampened. These differences stem from micro-level adjustment frictions involved in purchases of durable goods. The model is corroborated with evidence from micro survey data.

• Hansen, Niels-Jakob Harbo; Harmenberg, Karl; Öberg, Erik & Sievertsen, Hans (2021). Gender Disparities in Top Earnings: Measurement and Facts for Denmark 1980-2013. Journal of Economic Inequality. ISSN 1569-1721. doi: 10.1007/s10888-020-09476-1. Full text in Research Archive
• Harmenberg, Karl (2021). Aggregating Heterogeneous-Agent Models with Permanent Income Shocks. Journal of Economic Dynamics and Control. ISSN 0165-1889. 129. doi: 10.1016/j.jedc.2021.104185. Full text in Research Archive Show summary

  I introduce a method for simulating aggregate dynamics of heterogeneous-agent models where log permanent income follows a random walk. The idea is to simulate the model using a counterfactual permanent-income-neutral measure which incorporates the effect that permanent income shocks have on macroeconomic aggregates. With the permanent-income-neutral measure, one does not need to keep track of the permanent-income distribution. The permanent-income-neutral measure is both useful for the analytical characterization of aggregate consumption-savings behavior and for simulating numerical models. Furthermore, it is trivial to implement with a few lines of code.

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• Harmenberg, Karl; Olsson, Maria Christina & Öberg, Erik (2026). Firm Market Power, Wage Rigidity and Demand-Determined Business Cycles. Full text in Research Archive
• Harmenberg, Karl; Öberg, Erik & Olsson, Maria Christina (2026). Wages and Hours Worked: Micro-Level Dynamics and Macroeconomic Implications. Full text in Research Archive
• Harmenberg, Karl; Broer, Tobias; Druedahl, Jeppe & Öberg, Erik (2022). The unemployment-risk channel in business-cycle fluctuations. Full text in Research Archive
• Harmenberg, Karl; Broer, Tobias; Krusell, Per & Öberg, Erik (2022). Macroeconomic dynamics with rigid wage contracts. Full text in Research Archive
• Harmenberg, Karl; Broer, Tobias; Druedahl, Jeppe & Öberg, Erik (2022). The unemployment-risk channel in business-cycle fluctuations. Full text in Research Archive
• Harmenberg, Karl; Broer, Tobias; Druedahl, Jeppe & Öberg, Erik (2022). The unemployment-risk channel in business-cycle fluctuations. Full text in Research Archive
• Harmenberg, Karl; Gulbrandsen, Magnus Andreas Haare; Fagereng, Andreas & Natvik, Gisle James (2022). Macro shocks in a micro laboratory: evidence on spousal income insurance, spending, and spillovers. Full text in Research Archive
• Harmenberg, Karl; Boppart, Timo; Hassler, John; Krusell, Per & Olsson, Jonna (2022). Integrated epi-econ assessment: quantitative theory. Full text in Research Archive
• Harmenberg, Karl; Broer, Tobias; Druedahl, Jeppe & Öberg, Erik (2022). The unemployment-risk channel in business-cycle fluctuations. Full text in Research Archive
• Harmenberg, Karl & Hernandez, Raysa Rosario Lizarraga (2022). An earnings process for the top. Full text in Research Archive
• Boppart, Timo; Hassler, John; Harmenberg, Karl; Krusell, Per & Olsson, Jonna (2021). Integrated epi-econ assessment. Full text in Research Archive
• Broer, Tobias; Druedahl, Jeppe; Harmenberg, Karl & Öberg, Erik (2021). The Unemployment-Risk Channel in Business-Cycle Fluctuations. Full text in Research Archive
• Boppart, Timo; Harmenberg, Karl; Krusell, Per & Olsson, Jonna (2021). Integrated epi-econ assessment of vaccination. Full text in Research Archive

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