Ludwig Straub, Clark Medalist 2026

Ludwig Straub is a macroeconomist who has made fundamental contributions to the incorporation of agent heterogeneity into macroeconomic modeling. The issues he has addressed range from the conceptual to the computational, always with applied questions in mind, such as the impact of non-homothetic savings patterns on interest rates and the efficacy of monetary policy, or the tracing of decentralized Keynesian multipliers through a disaggregated multi-sector economy, or the efficient computation of aggregate responses to economic shocks with endogenously changing income distributions. Straub has also made contributions to spatial economics, public finance, and to the study of information and uncertainty in economic fluctuations, but this citation singles out his work on agent heterogeneity as the contribution that best establishes his research identity.

Several of Straub's most influential papers study the relationship between heterogeneity and aggregate demand. In "Indebted Demand" (Quarterly Journal of Economics, 2021, with Atif Mian and Amir Sufi), Straub develops a tractable framework in which non-homothetic preferences and unequal balance sheets link household debt, inequality, and the real interest rate. Over the past 40 years, there has been a rise in debt and decline in the real interest rate in advanced economies, coupled with rising income inequality and financial deregulation. To explain this, Straub and co-authors develop a model with non-homothetic consumption-saving behavior, in which debt is held largely by the relatively poor. In a high-debt regime, funds flow from high-consumption debtors to high-savings creditors, which depresses aggregate demand and, in turn, the rate of interest, pointing to a self-reinforcing low-interest high-debt regime. Low rates of interest encourage borrowing and indebtedness with such debt being mainly held by the relatively poor.

The theory is compelling and tractable, and all sorts of secular changes feed into it. For instance, as economic inequality rises, perhaps for other reasons, so will debt levels, which again work towards depressing the interest rate as aggregate demand shrinks, and narrow the scope for policy as the economy moves towards a liquidity trap. Similarly, policies that involve household or government debt creation can depress demand and interest rates. Debt-financed demand creation in the here and now runs into its own countervailing forces in the future.

Straub's work on demand heterogeneity extends well beyond this setting. In "The Intertemporal Keynesian Cross" (Journal of Political Economy, 2024, with Adrien Auclert and Matthew Rognlie), he shows how heterogeneous marginal propensities to consume fundamentally alter the transmission of fiscal policy over time. By embedding classic Keynesian intuitions in a fully dynamic environment, the paper clarifies how spending today affects future demand through distributional channels. These contributions help reconcile long-standing macroeconomic ideas with modern intertemporal models and provide a rigorous foundation for analyzing fiscal stabilization in economies with inequality and incomplete markets.

A second major contribution is Straub's role in developing new methods for solving and estimating heterogeneous-agent macro models. In "Using the Sequence-Space Jacobian to Solve and Estimate Heterogeneous-Agent Models" (Econometrica, 2021, with Adrien Auclert, Bence Bardóczy, and Matthew Rognlie), he introduces a powerful and unifying approach to characterizing equilibrium responses to aggregate shocks when the distribution of agents evolves endogenously. By focusing on equilibrium mappings between sequences of aggregate variables and exploiting structure from dynamic programming, this approach dramatically simplifies the computation of impulse responses in rich heterogeneous-agent environments.

Beyond their technical importance, these sequence-space methods have had a profound influence on how economists conceptualize aggregation. They make transparent the channels through which individual behavior and distributional dynamics combine to generate aggregate responses, and they have quickly become central to both frontier research and graduate training.

Straub has also made novel contributions to the study of fiscal policy and multisectoral economies. In "Disaggregated Economic Accounts" (Quarterly Journal of Economics, 2026, with Asger Andersen, Kilian Huber, Niels Johannesen, and Emil Toft Vestergaard), he develops a framework that links consumers and producers through detailed networks of expenditure, income, and production. Using comprehensive administrative data, the paper traces how fiscal shocks propagate through the economy, showing that policy multipliers depend not only on who receives transfers but also on where spending flows and which sectors face slack.

These insights extend naturally to spatial and international settings, where differences in trade exposure, industry structure, and labor market conditions shape aggregate outcomes. Straub's work bridges micro-spatial heterogeneity and macroeconomic policy analysis, demonstrating how detailed economic structure mediates the effectiveness of national policies. It exemplifies his ability to combine large-scale quantitative modeling with sharp economic intuition.

In monetary economics, Straub has reexamined core macroeconomic relationships through the lens of heterogeneity and aggregation. In "New Pricing Models, Same Old Phillips Curves?" (Quarterly Journal of Economics, 2024, with Adrien Auclert, Rodolfo Rigato, and Matthew Rognlie), he shows that, to first order, a wide class of state-dependent pricing models aggregates to familiar Phillips-curve relationships. This result clarifies the limits of what richer microfoundations can change in aggregate inflation dynamics while identifying the margins along which they matter most. 

Through his integration of heterogeneity into the core of macroeconomic analysis, Ludwig Straub has fundamentally advanced the field's understanding of demand, policy transmission, and macroeconomic dynamics. The John Bates Clark Medal is awarded to Ludwig Straub in recognition of his profound and far-reaching contributions to modern macroeconomics.