When fiscal policy is active and monetary policy is passive in a heterogeneous agent new
Keynesian (HANK) model, deficit-financed transfers to poorer households lead to similar
amounts of cumulative inflation but greater increases in real output than transfers to wealthier
households. Similarly, while the overall impact of monetary policy on the price level aligns
with an active-fiscal/passive monetary representative agent benchmark, the presence of low-
wealth households who react only to current income attenuates the effect of monetary policy
on output. For both monetary and fiscal policy, household heterogeneity is of first-order
importance for real variables but has little impact on cumulative inflation.