Published Classic Review of Economic Studies Online 23 Mar 2019 Published Jan 2020The New Keynesian Transmission Mechanism: A Heterogeneous-Agent PerspectiveTobias Broer · Niels-Jakob H. Hansen · Per Krusell · Erik ÖbergThis paper shows that the standard New Keynesian monetary transmission mechanism -- in which a rate cut raises output and employment -- breaks down in the simplest possible heterogeneous-agent version …