Adverse Selection, Risk Sharing and Business Cycles

Marcelo Veracierto

No 232, 2015 Meeting Papers from Society for Economic Dynamics

Abstract: I consider a real business cycle model in which agents have private information about an idiosyncratic shock to their value of leisure. I consider the mechanism design problem for this economy and describe a computational method to solve it. This is an important contribution of the paper since the method could be used to solve a wide class of models with heterogeneous agents and aggregate uncertainty. Calibrating the model to U.S. data I find a striking result: That the information frictions that plague the economy have no effects on business cycle fluctuations.

Date: 2015
New Economics Papers: this item is included in nep-cmp, nep-dge and nep-mac
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Related works:
Working Paper: Adverse Selection, Risk Sharing and Business Cycles (2017)
Working Paper: Adverse Selection, Risk Sharing and Business Cycles (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed015:232

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