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Article Dans Une Revue International Economic Review Année : 2022

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

Xavier Ragot

Résumé

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.
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Dates et versions

hal-03601016 , version 1 (08-03-2022)

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  • HAL Id : hal-03601016 , version 1

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François Le Grand, Xavier Ragot. Managing Inequality over Business Cycles : Optimal Policies with Heterogeneous Agents and Aggregate Shocks. International Economic Review, 2022, 63 (1), 511-540 p. ⟨hal-03601016⟩

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