Idiosyncratic income risk and aggregate fluctuations
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- dc.contributor.author Debortoli, Davide
- dc.contributor.author Galí, Jordi
- dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
- dc.date.accessioned 2024-11-14T10:09:39Z
- dc.date.available 2024-11-14T10:09:39Z
- dc.date.issued 2021-07-01
- dc.date.modified 2024-11-14T10:08:13Z
- dc.description.abstract We study the role of idiosyncratic income risk for aggregate fluctuations within a simple heterogeneous households framework. We show that the presence of idiosyncratic income shocks affects the economy's response to an aggregate shock even in the absence of binding borrowing constraints and/or cyclical income risk. Their impact can be captured by a consumption-weighted average of the changes in consumption risk generated by an aggregate shock. We apply this framework to two example economies -an endowment economy and a New Keynesian economy- and show that under plausible calibrations the impact of idiosyncratic income risk on aggregate fluctuations is quantitatively small, since most of the changes in consumption risk are concentrated among poorer (low consumption) households.
- dc.format.mimetype application/pdf*
- dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=1796
- dc.identifier.citation American Economic Journal: Macroeconomics, forthcoming.
- dc.identifier.uri http://hdl.handle.net/10230/68570
- dc.language.iso eng
- dc.relation.ispartofseries Economics and Business Working Papers Series; 1796
- dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
- dc.rights.accessRights info:eu-repo/semantics/openAccess
- dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
- dc.subject.keyword heterogeneous agents
- dc.subject.keyword economic fluctuations
- dc.subject.keyword aggregate shocks
- dc.subject.keyword idiosyncratic shocks
- dc.subject.keyword monetary policy
- dc.subject.keyword hank models.
- dc.subject.keyword Macroeconomics and International Economics
- dc.title Idiosyncratic income risk and aggregate fluctuations
- dc.title.alternative
- dc.type info:eu-repo/semantics/workingPaper