Business cycle fluctuations and the cost of insurrance in computable heterogeneous agent economies

Javier Díaz-Giménez

UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía

Abstract: In this paper I study the business cycle implications of alternative insurance technologies using a computable general equilibrium heterogeneous agent environment. I find that the limited monetary arrangement entails larger fluctuations in hours relative to productivity than those that obtain in an identical economy where every risk is costlessly insurable. I also find that in the monetary economy the price level displays a markedly countercyclical behavior. Finally I evaluate the welafare costs of the monetary self-insurance arrangement.

Keywords: Heterogeneous; Agents; Business; Cycles; Insurance; Arrangements (search for similar items in EconPapers)
Date: 1991-02
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Persistent link: https://EconPapers.repec.org/RePEc:cte:werepe:2795

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