It’s a small small welfare cost of fluctuations
Lucas [1987] has shown that in a representative agent framework, the potential welfare gain from stabilizing consumption around its mean is small. We provide an example and some insight for why Lucas’ measure is an upper bound of the welfare cost of fluctuations in walrasian economies.
| Authors: | , |
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| Format: | report |
| Publication Date: | 2005 |
| Country: | España |
| Institution: | Universidad Complutense de Madrid (UCM) |
| Repository: | Docta Complutense |
| Language: | English |
| OAI Identifier: | oai:docta.ucm.es:20.500.14352/56634 |
| Online Access: | https://hdl.handle.net/20.500.14352/56634 |
| Access Level: | Open access |
| Keyword: | E32 C63 C68 Cost of Business Cycles Dynamic General Equilibrium Econometría (Economía) 5302 Econometría |
| Summary: | Lucas [1987] has shown that in a representative agent framework, the potential welfare gain from stabilizing consumption around its mean is small. We provide an example and some insight for why Lucas’ measure is an upper bound of the welfare cost of fluctuations in walrasian economies. |
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