The Welfare Cost of Business Cycles in an Economy with Nonclearing Markets
AbstractIn this paper we measure the welfare cost of fluctuations in a simple representative agent economy with nonclearing markets. The market friction we consider involves price rigidities and a voluntary exchange rationing scheme. These features are incorporated into an otherwise standard neoclassical growth model. We show that the frictions we introduce make the losses from fluctuations much bigger than in a frictionless environment.
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Bibliographic InfoPaper provided by Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales in its series Documentos del Instituto Complutense de Análisis Económico with number 0403.
Length: 17 pages
Date of creation: 2004
Date of revision:
Cost of business cycles; Nonclearing markets; Dynamic general equilibrium;
Other versions of this item:
- Portier Franck & Puch Luis A., 2007. "The Welfare Cost of Business Cycles in an Economy with Nonclearing Markets," The B.E. Journal of Macroeconomics, De Gruyter, vol. 6(3), pages 1-16, January.
- Portier, Franck & Puch, Luis, 2004. "The Welfare Cost of Business Cycles in an Economy with Non-Clearing Markets," CEPR Discussion Papers 4799, C.E.P.R. Discussion Papers.
- Luis A. Puch & Franck Portier, 2004. "The Welfare Cost of Business Cycles in an Economy with Nonclearing Markets," 2004 Meeting Papers 570, Society for Economic Dynamics.
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-02-13 (All new papers)
- NEP-DGE-2005-02-13 (Dynamic General Equilibrium)
- NEP-MAC-2005-02-13 (Macroeconomics)
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- Gadi Barlevy, 2005. "The cost of business cycles and the benefits of stabilization," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q I, pages 32-49.
- Mittnik, Stefan & Semmler, Willi, 2012. "Regime dependence of the fiscal multiplier," Journal of Economic Behavior & Organization, Elsevier, vol. 83(3), pages 502-522.
- Gadi Barlevy, 2004. "The Cost of Business Cycles and the Benefits of Stabilization: A Survey," NBER Working Papers 10926, National Bureau of Economic Research, Inc.
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