The History Of Macroeconomics From Keynes To HANK Models

Why do households respond so differently to interest rates and stimulus checks, and what does that mean for economic policy? On this episode of Capitalism and Freedom in the 21st Century, Jon Hartley welcomes University of Chicago economics professor Greg Kaplan to discuss his book, Macro: The Economic Models That Shape Our World. They trace the evolution of macroeconomic thinking, from Keynes and Milton Friedman to Heterogeneous Agent New Keynesian (HANK) models, which account for differences in households’ income, wealth, and access to cash.

Kaplan explains how these differences reshape our understanding of consumer spending, monetary policy, and fiscal stimulus. The conversation also explores “wealthy hand-to-mouth” households, the redistributive effects of emergency stimulus payments, the case for stronger social insurance, and debates over forward guidance and quantitative easing. Finally, they discuss why economic models are essential for evaluating policies that have never been tried, as well as how new data can help economists build better ones.

Recorded on October 24, 2026.

ABOUT THE GUEST 

Greg Kaplan is the Alvin H. Baum Professor in the Kenneth C. Griffin Department of Economics and the College at the University of Chicago. His research spans macroeconomics, labor economics, and applied microeconomics, with published work addressing topics such as fiscal and monetary policy, labor market dynamics, risk sharing and inequality, consumption behavior, and household formation and migration.

Kaplan is the lead editor of Journal of Political Economy Macroeconomics and formerly served as editor of the Journal of Political Economy and the Review of Economic Dynamics. He is co-founder and chairman of e61 Institute, a research associate at the National Bureau of Economic Research, and a research fellow at the Institute for Fiscal Studies. He serves as an Economic Consultant at the Federal Reserve Bank of Chicago. Kaplan received a Sloan Foundation fellowship in 2015 and the Central Banking Prize for Economics in Central Banking in 2019. 

RELATED SOURCES

• Macro: The Economic Models That Shape Our World by Greg Kaplan