It's a Small Small Welfare Cost of Fluctuations
AbstractLucas  has shown that in a representative agent framework, the potential welfare gain from stabilizing consumption around its mean is small. We provide an example and some insight for why Lucas' measure is an upper bound of the welfare cost of fluctuations in walrasian economies.
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- Franck Portier & Luis A. Puch, 2005. "It’s a Small Small Welfare Cost of Fluctuations," Documentos de Trabajo del ICAE, Universidad Complutense de Madrid, Facultad de Ciencias EconÃ³micas y Empresariales, Instituto Complutense de AnÃ¡lisis EconÃ³mico 0513, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico.
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
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