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The welfare cost of business cycles in an economy with nonclearing markets


Portier, Franck and Puch González, Luis Antonio (2004) The welfare cost of business cycles in an economy with nonclearing markets. [ Documentos de trabajo del Instituto Complutense de Análisis Económico (ICAE); nº 0403, 2004, ]


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In this paper we measure the welfare cost of fluctuations in a simple representative
agent economy with nonclearing markets. The market friction we consider involves
price rigidities and a voluntary exchange rationing scheme. These features are incorporated
into an otherwise standard neoclassical growth model. We show that the
frictions we introduce make the losses from fluctuations much bigger than in a frictionless

Item Type:Working Paper or Technical Report
Additional Information:

JEL classification: E32, C63, C68

Uncontrolled Keywords:Cost of business cycles, Nonclearing markets, Dynamic general equilibrium
Subjects:Social sciences > Economics > Econometrics
Series Name:Documentos de trabajo del Instituto Complutense de Análisis Económico (ICAE)
ID Code:7717

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Deposited On:11 Mar 2008
Last Modified:06 Feb 2014 07:55

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