The Welfare Cost of Business Cycles in an Economy with Non-Clearing Markets

Franck Portier () and Luis A. Puch ()

No 4799, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In this Paper we measure the welfare cost of fluctuations in a simple representative agent economy with non-clearing 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; dynamic general equilibrium; non-clearing markets (search for similar items in EconPapers)
JEL-codes: C63 C68 E32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge and nep-mac
Date: 2004-12

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