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Incomplete unemployment insurance and aggregate fluctuations

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  • Francesc Obiols-Homs

Abstract

This paper develops a real business cycle model characterized by a large number of agents facing idiosyncratic employment shocks and borrowing constraints. In particular, I use numerical methods to study the statistical properties of aggregate variables in equilibrium under both complete and incomplete insurance markets. The results show that the model with incomplete markets produces standard deviations and correlations close to the ones observed in the U.S. economy over the post-war period.

Suggested Citation

  • Francesc Obiols-Homs, 2001. "Incomplete unemployment insurance and aggregate fluctuations," Computing in Economics and Finance 2001 192, Society for Computational Economics.
    • Handle: RePEc:sce:scecf1:192
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    Cited by:

    1. Marcet, Albert & Obiols-Homs, Francesc & Weil, Philippe, 2007. "Incomplete markets, labor supply and capital accumulation," Journal of Monetary Economics, Elsevier, vol. 54(8), pages 2621-2635, November.
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    7. Michał Gradzewicz & Krzysztof Makarski & Joanna Tyrowicz, 2013. "Do We Really Need to Start From Scratch? Economic Theory on Economic Crises," Working Papers 2013-17, Faculty of Economic Sciences, University of Warsaw.
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    More about this item

    Keywords

    Aggregate fluctuations; idiosyncratic shocks; incomplete insurance;
    All these keywords.

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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