Risk Sharing, the Minimum wage, and the Business Cycle
This paper constructs a dynamic general equilibrium model in which labor incomes are influenced by risk sharing considerations and borrowing restrictions. We show that the dynamic properties of such an economy, in which the sharing of income and risk is effected solely via the labor market, are consistent with the principal stylized facts of the business cycle. We consider a situation in which workers are unable to borrow against their future income. This capital market imperfection is seen to alter the workings of the labor market whereby the latter substitutes as the vehicle for income and risk reallocation. The implications of this substitution for labor markets have been highlighted in the implicit contracts literature. Our objective here is to show how the introduction of such considerations affects the time series properties of a specific dynamic, multi-agent general equilibrium model
(This abstract was borrowed from another version of this item.)
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:||1990|
|Contact details of provider:|| Postal: UNIVERSITE DE BOURGOGNE, INSTITUT DE MATHEMATIQUES ECONOMIQUES, C.N.R. S. FACULTE DE SCIENCE ECONOMIQUE ET DE GESTION, 4 BLVD GABRIEL 21100 DIJON.|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Danthine, Jean-Pierre & Donaldson, John B. & Mehra, Rajnish, 1989.
"On some computational aspects of equilibrium business cycle theory,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 13(3), pages 449-470, July.
- Jean-Pierre DANTHINE & John B. DONALDSON & Rajnish MEHRA, 1988. "On some computational Aspects of Equilibrium Business Cycle Theory," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 8810, Université de Lausanne, Faculté des HEC, DEEP.
- Christiano, Lawrence J & Eichenbaum, Martin, 1992. "Current Real-Business-Cycle Theories and Aggregate Labor-Market Fluctuations," American Economic Review, American Economic Association, vol. 82(3), pages 430-450, June.
- Lawrence J. Christiano & Martin Eichenbaum, 1990. "Current real business cycle theories and aggregate labor market fluctuations," Working Paper Series, Macroeconomic Issues 90, Federal Reserve Bank of Chicago.
- Lawrence J. Christiano & Martin Eichenbaum, 1990. "Current real business cycle theories and aggregate labor market fluctuations," Discussion Paper / Institute for Empirical Macroeconomics 24, Federal Reserve Bank of Minneapolis.
- McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
- Rosen, Sherwin, 1985. "Implicit Contracts: A Survey," Journal of Economic Literature, American Economic Association, vol. 23(3), pages 1144-1175, September.
- Sherwin Rosen, 1985. "Implicit Contracts: A Survey," NBER Working Papers 1635, National Bureau of Economic Research, Inc.
- Wright, Randall D, 1988. "The Observational Implications of Labor Contracts in a Dynamic General Equilibrium Model," Journal of Labor Economics, University of Chicago Press, vol. 6(4), pages 530-551, October.
- Hiroshi Osano, 1988. "Real Business Cycles in a Dynamic Labor Contract Equilibrium," Discussion Papers 809, Northwestern University, Center for Mathematical Studies in Economics and Management Science. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:fth:dijone:9007. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Krichel)
If references are entirely missing, you can add them using this form.