  We study a self-reflexive DSGE model with heterogeneous households, aimed at
characterising the impact of economic recessions on the different strata of the
society. Our framework allows to analyse the combined effect of income
inequalities and confidence feedback mediated by heterogeneous social networks.
By varying the parameters of the model, we find different crisis typologies:
loss of confidence may propagate mostly within high income households, or
mostly within low income households, with a rather sharp crossover between the
two. We find that crises are more severe for segregated networks (where
confidence feedback is essentially mediated between agents of the same social
class), for which cascading contagion effects are stronger. For the same
reason, larger income inequalities tend to reduce, in our model, the
probability of global crises. Finally, we are able to reproduce a perhaps
counter-intuitive empirical finding: in countries with higher Gini
coefficients, the consumption of the lowest income households tends to drop
less than that of the highest incomes in crisis times.
