IDEAS home Printed from https://ideas.repec.org/p/cte/werepe/2795.html
   My bibliography  Save this paper

Business cycle fluctuations and the cost of insurrance in computable heterogeneous agent economies

Author

Listed:
  • Díaz-Giménez, Javier

Abstract

In this paper I study the business cycle implications of alternative insurance technologies using a computable general equilibrium heterogeneous agent environment. I find that the limited monetary arrangement entails larger fluctuations in hours relative to productivity than those that obtain in an identical economy where every risk is costlessly insurable. I also find that in the monetary economy the price level displays a markedly countercyclical behavior. Finally I evaluate the welafare costs of the monetary self-insurance arrangement.

Suggested Citation

  • Díaz-Giménez, Javier, 1991. "Business cycle fluctuations and the cost of insurrance in computable heterogeneous agent economies," UC3M Working papers. Economics 2795, Universidad Carlos III de Madrid. Departamento de Economía.
    • Handle: RePEc:cte:werepe:2795
    as

    Download full text from publisher

    File URL: https://e-archivo.uc3m.es/bitstream/handle/10016/2795/we9111.pdf?sequence=1
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Hansen, Gary D., 1985. "Indivisible labor and the business cycle," Journal of Monetary Economics, Elsevier, vol. 16(3), pages 309-327, November.
    2. Robert E. Hall, 1988. "Substitution over Time in Work and Consumption," NBER Working Papers 2789, National Bureau of Economic Research, Inc.
    3. Rogerson, Richard, 1988. "Indivisible labor, lotteries and equilibrium," Journal of Monetary Economics, Elsevier, vol. 21(1), pages 3-16, January.
    4. Prescott, Edward C & Townsend, Robert M, 1984. "Pareto Optima and Competitive Equilibria with Adverse Selection and Moral Hazard," Econometrica, Econometric Society, vol. 52(1), pages 21-45, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Garratt, Rod & Keister, Todd & Qin, Cheng-Zhong & Shell, Karl, 2002. "Equilibrium Prices When the Sunspot Variable Is Continuous," Journal of Economic Theory, Elsevier, vol. 107(1), pages 11-38, November.
    2. Bianconi, Marcelo, 2008. "Heterogeneity, adverse selection and valuation with endogenous labor supply," International Review of Economics & Finance, Elsevier, vol. 17(1), pages 113-126.
    3. Alberto Bennardo & Salvatore Piccolo, 2005. "Competitive occupational choices with endogenous health risks," Levine's Working Paper Archive 784828000000000199, David K. Levine.
    4. Alberto Bennardo & Salvatore Piccolo, 2014. "Competitive Markets With Endogenous Health Risks," Journal of the European Economic Association, European Economic Association, vol. 12(3), pages 755-790, June.
    5. Victoria Osuna & Jose-Victor Rios-Rull, 2003. "Implementing the 35 Hour Workweek by Means of Overtime Taxation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 6(1), pages 179-206, January.
    6. Michael Kuklik & Nikita Cespedes, 2013. "Optimal Taxation and Life Cycle Labor Supply Profile," Documentos de Trabajo / Working Papers 2013-352, Departamento de Economía - Pontificia Universidad Católica del Perú.
    7. Edward C. Prescott, 2006. "The Transformation of Macroeconomic Policy and Research," The American Economist, Sage Publications, vol. 50(1), pages 3-20, March.
    8. Anil K. Jain & Robert M. Townsend, 2021. "The economics of platforms in a Walrasian framework," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 71(3), pages 877-924, April.
    9. Prescott, Edward Simpson, 2004. "Computing solutions to moral-hazard programs using the Dantzig-Wolfe decomposition algorithm," Journal of Economic Dynamics and Control, Elsevier, vol. 28(4), pages 777-800, January.
    10. Edward Simpson Prescott, 1999. "A primer on moral-hazard models," Economic Quarterly, Federal Reserve Bank of Richmond, issue Win, pages 47-78.
    11. Shell, Karl & Wright, Randall, 1993. "Indivisibilities, Lotteries, and Sunspot Equilibria," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 3(1), pages 1-17, January.
    12. Prescott, Edward C. & Shell, Karl, 2002. "Introduction to Sunspots and Lotteries," Journal of Economic Theory, Elsevier, vol. 107(1), pages 1-10, November.
    13. Kilenthong, Weerachart & Townsend, Robert, 2007. "Market Based, Segregated Exchanges with Default Risk," MPRA Paper 20724, University Library of Munich, Germany, revised 12 Nov 2009.
    14. Anil K. Jain & Robert M. Townsend, 2020. "The Economics of Platforms in a Walrasian Framework," International Finance Discussion Papers 1280, Board of Governors of the Federal Reserve System (U.S.).
    15. Kehoe, Timothy J. & Levine, David K. & Prescott, Edward C., 2002. "Lotteries, Sunspots, and Incentive Constraints," Journal of Economic Theory, Elsevier, vol. 107(1), pages 39-69, November.
    16. Francesc Obiols-Homs, 2003. "Incomplete Unemployment Insurance and Aggregate Fluctuations," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 6(3), pages 602-636, July.
    17. Michael A. Sadler, 2000. "Escaping Poverty: Risk-Taking and Endogenous Inequality in a Model of Equilibrium Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 3(4), pages 704-725, October.
    18. Edward C. Prescott, 2006. "Nobel Lecture: The Transformation of Macroeconomic Policy and Research," Journal of Political Economy, University of Chicago Press, vol. 114(2), pages 203-235, April.
    19. Prescott, Edward C. & Rios-Rull, Jose-Victor, 1992. "Classical competitive analysis of economies with Islands," Journal of Economic Theory, Elsevier, vol. 57(1), pages 73-98.
    20. Jochen Mankart & Rigas Oikonomou, 2017. "Household Search and the Aggregate Labour Market," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 84(4), pages 1735-1788.

    More about this item

    Keywords

    Heterogeneous Agents;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cte:werepe:2795. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ana Poveda (email available below). General contact details of provider: http://www.eco.uc3m.es/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.