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Managing Inequality over Business Cycles: Optimal Policies with Heterogeneous Agents and Aggregate Shocks

Abstract : 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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Preprints, Working Papers, ...
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https://hal-sciencespo.archives-ouvertes.fr/hal-03476095
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Submitted on : Sunday, December 12, 2021 - 5:50:20 AM
Last modification on : Thursday, March 31, 2022 - 5:58:02 PM

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François Le Grand, Xavier Ragot. Managing Inequality over Business Cycles: Optimal Policies with Heterogeneous Agents and Aggregate Shocks. 2020. ⟨hal-03476095⟩

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