Time-Varying Employment Risks, Consumption Composition, and Fiscal Policy

Makoto Nirei, Sanjib Sarker and Kazufumi Yamana
Additional contact information
Sanjib Sarker: Department of Economics, Utah State University

No 35, UTokyo Price Project Working Paper Series from University of Tokyo, Graduate School of Economics

Abstract: This study examines the response of aggregate consumption to active labor market policies that reduce unemployment. We develop a dynamic general equilibrium model with heterogeneous agents and uninsurable unemployment as well as policy regime shocks to quantify the consumption effects of policy. By implementing numerical experiments using the model, we demonstrate a positive effect on aggregate consumption even when the policy serves as a pure transfer from the employed to the unemployed. The positive effect on consumption results from the reduced precautionary savings of the households who indirectly benefit from the policy by a decreased unemployment hazard in future.

Keywords: Time-varying idiosyncratic risk; unemployment risk; precautionary saving; regimeswitching fiscal policy; transfers (search for similar items in EconPapers)
JEL-codes: E21 H53 J08 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2014-12
New Economics Papers: this item is included in nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.price.e.u-tokyo.ac.jp/img/researchdata/pdf/p_wp053.pdf (application/pdf)

Related works:
Journal Article: Time-Varying Employment Risks, Consumption Composition, and Fiscal Policy (2016)
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:upd:utppwp:035

Access Statistics for this paper

More papers in UTokyo Price Project Working Paper Series from University of Tokyo, Graduate School of Economics University of Tokyo 702 Faculty of Economics, The University of Tokyo, 7-3-1 Hongo, Bunkyo-ku, Tokyo, 113-0033, Japan. Contact information at EDIRC.
Bibliographic data for series maintained by Yayoi Hatano (watlab@e.u-tokyo.ac.jp).