Revisiting the Welfare Effects of Eliminating Business Cycles: The case of short-term and long-term unemployment

Toshihiko Mukoyama, Aysegul Sahin, Anthony A. Smith and Per Krusell
Additional contact information
Anthony A. Smith: Yale University

No 435, 2008 Meeting Papers from Society for Economic Dynamics

Abstract: We investigate the welfare effects of eliminating business cycles in a model with substantial consumer heterogeneity. The heterogeneity arises from uninsurable idiosyncratic uncertainty in preferences and employment status. We distinguish between short- and long-term unemployment. Long-term unemployment as a fraction of total unemployment increases during economic slowdowns. We calibrate the model to match the distribution of wealth in the U.S. and the transition probabilities among employment, short-term unemployment, and long-term unemployment. Our experiment takes into account the transition from the original economy with cycles to the new steady state of an economy without cycles. We examine how business cycles affect the welfare of consumers depending on their wealth, employment status, and rate of patience.

Date: 2008
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
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:red:sed008:435

Access Statistics for this paper

More papers in 2008 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().