Abstract
This paper develops a real business cycle model characterized by idiosyncratic employment shocks and quantitatively explores the behavior of aggregate variables under the assumptions of complete and incomplete insurance markets. The results show that the model with incomplete markets produces standard deviations and correlations of aggregate labor input and labor productivity close to the ones of the US economy for the post-war period.
| Original language | English |
|---|---|
| Pages (from-to) | 602-636 |
| Number of pages | 35 |
| Journal | Review of Economic Dynamics |
| Volume | 6 |
| DOIs | |
| Publication status | Published - 1 Jan 2003 |
