The Welfare Cost of Business Cycles in an Economy with Nonclearing Markets

Franck Portier () and Luis Puch

Documentos de Trabajo del ICAE from Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico

Abstract: In 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.

Keywords: Cost of business cycles; Nonclearing markets; Dynamic general equilibrium (search for similar items in EconPapers)
JEL-codes: C63 C68 E32 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2004
New Economics Papers: this item is included in nep-dge and nep-mac
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https://eprints.ucm.es/id/eprint/7717/1/0403.pdf (application/pdf)

Related works:
Journal Article: The Welfare Cost of Business Cycles in an Economy with Nonclearing Markets (2007)
Working Paper: The Welfare Cost of Business Cycles in an Economy with Non-Clearing Markets (2004)
Working Paper: The Welfare Cost of Business Cycles in an Economy with Nonclearing Markets (2004)
Working Paper: The Welfare Cost of Business Cycles in an Economy with Nonclearing Markets
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