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

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Portier, Franck and Puch, Luis A. (2004) The welfare cost of business cycles in an economy with nonclearing markets. [ Documentos de trabajo del Instituto Complutense de Análisis Económico (ICAE); nº 03, 2004, ]

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Abstract

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 environment.


Item Type:Working Paper or Technical Report
Uncontrolled Keywords:Cost of business cycles; Nonclearing markets; Dynamic general equilibrium.
Subjects:Social sciences > Economics > Econometrics
JEL:E32, C63, C68
Series Name:Documentos de trabajo del Instituto Complutense de Análisis Económico (ICAE)
Volume:2004
Number:03
ID Code:7717
Deposited On:11 Mar 2008
Last Modified:16 Apr 2021 12:29

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