Skip to Main content Skip to Navigation
Journal articles

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

François Le Grand 1, 2 Xavier Ragot 3, 4, 5
1 EM - emlyon business school
2 ETH Zürich - Eidgenössische Technische Hochschule - Swiss Federal Institute of Technology [Zürich]
3 ECON - Département d'économie (Sciences Po)
4 CNRS - Centre National de la Recherche Scientifique
5 OFCE - Observatoire français des conjonctures économiques (Sciences Po)
Abstract : We present a truncation theory of idiosyncratic histories for heterogeneous-agent models. This method allows us to solve for optimal Ramsey policies in such models with aggregate shocks. The method can be applied to a large variety of settings, with occasionally binding credit constraints. We use this theory to characterize the optimal level of unemployment insurance over the business cycle in a production economy. We find that the optimal policy is countercyclical.
Keywords : Incomplete Markets Optimal Policies Heterogeneous Agent Models
Document type :
Journal articles
Complete list of metadata
https://hal-sciencespo.archives-ouvertes.fr/hal-03501381
Contributor : Melissa Mundell Connect in order to contact the contributor
Submitted on : Thursday, December 30, 2021 - 2:00:47 PM
Last modification on : Saturday, May 14, 2022 - 3:18:59 AM

File

Vignette du document
2021-Managing Inequality over ...

Licence

Distributed under a Creative Commons Attribution - NonCommercial - NoDerivatives 4.0 International License

Identifiers

Collections

SCIENCESPO | ECON-SCPO | OFCE | EMLYON | CNRS | SCPO_OA

Citation

François Le Grand, Xavier Ragot. Managing Inequality over Business Cycles: Optimal Policies with Heterogeneous Agents and Aggregate Shocks. International Economic Review, Wiley, In press, 63 (1), pp.511-540. ⟨10.1111/iere.12537⟩. ⟨hal-03501381⟩

Export

BibTeX TEI DC DCterms EndNote Datacite

Share

Metrics

Record views

14

Files downloads

19