Type
Working paper
Titre
Managing Inequality over Business Cycles: Optimal Policies with Heterogeneous Agents and Aggregate Shocks
Dans
Sciences Po Economics Discussion Papers
Auteur(s)
LE GRAND François - EMLYON Business School (Auteur)
RAGOT Xavier - Observatoire français des conjonctures économiques (Auteur)
Éditeur
Paris : Département d'économie de Sciences Po
Collection
Sciences Po Economics Discussion Papers : 2020-10
Mots clés
Incomplete markets, Optimal policies, Heterogeneous agent models
Résumé
EN
We present a truncation theory of idiosyncratic histories for heterogeneous agent models. This method allows us to derive optimal Ramsey policies in heterogeneous agent models with aggregate shocks, in general frameworks. We use this method to characterize the optimal level of unemployment insurance over the business cycle in a production economy, with occasionally binding credit constraints.

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