MANAGING INEQUALITY OVER BUSINESS CYCLES: OPTIMAL POLICIES WITH HETEROGENEOUS AGENTS AND AGGREGATE SHOCKS

François Le Grand and Xavier Ragot

International Economic Review, 2022, vol. 63, issue 1, 511-540

Abstract: We present a truncation theory of idiosyncratic histories for heterogeneous‐agent models. This method allows us to solve for optimal Ramsey policies in such models with aggregate shocks. The method can be applied to a large variety of settings, with occasionally binding credit constraints. We use this theory to characterize the optimal level of unemployment insurance over the business cycle in a production economy. We find that the optimal policy is countercyclical.

Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://doi.org/10.1111/iere.12537

Related works:
Working Paper: Managing Inequality over Business Cycles: Optimal Policies with Heterogeneous Agents and Aggregate Shocks (2022)
Working Paper: Managing Inequality over Business Cycles: Optimal Policies with Heterogeneous Agents and Aggregate Shocks (2022)
Working Paper: Managing Inequality over Business Cycles: Optimal Policies with Heterogeneous Agents and Aggregate Shocks (2022)
Working Paper: Managing Inequality over Business Cycles: Optimal Policies with Heterogeneous Agents and Aggregate Shocks (2020)
Working Paper: Managing Inequality over Business Cycles: Optimal Policies with Heterogeneous Agents and Aggregate Shocks (2020)
Working Paper: Managing Inequality over Business Cycles: Optimal Policies with Heterogeneous Agents and Aggregate Shocks (2020)
Working Paper: Managing Inequality over the Business Cycles: Optimal Policies with Heterogeneous Agents and Aggregate Shocks (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:iecrev:v:63:y:2022:i:1:p:511-540

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0020-6598

Access Statistics for this article

International Economic Review is currently edited by Michael O'Riordan and Dirk Krueger

More articles in International Economic Review from Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association 160 McNeil Building, 3718 Locust Walk, Philadelphia, PA 19104-6297. Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().