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dc.contributor.authorSchulhofer-Wohl, Samen_US
dc.date.accessioned2012-06-18T13:45:56Z-
dc.date.available2012-06-18T13:45:56Z-
dc.date.issued2007en_US
dc.identifier.urihttp://hdl.handle.net/10419/59030-
dc.description.abstractI study the welfare cost of business cycles in a complete-markets economy where some people are more risk averse than others. Relatively more risk-averse people buy insurance against aggregate risk, and relatively less risk-averse people sell insurance. These trades reduce the welfare cost of business cycles for everyone. Indeed, the least risk-averse people benefit from business cycles. Moreover, even infinitely risk-averse people suffer only finite and, in my empirical estimates, very small welfare losses. In other words, when there are complete insurance markets, aggregate uctuations in consumption are essentially irrelevant not just for the average person- the surprising finding of Lucas (1987)- but for everyone in the economy, no matter how risk averse they are. If business cycles matter, it is because they affect productivity or interact with uninsured idiosyncratic risk, not because aggregate risk per se reduces welfare.en_US
dc.language.isoengen_US
dc.publisherPrinceton Universityen_US
dc.relation.ispartofseriesDiscussion papers in economics / Princeton University, Woodrow Wilson School of Public and International Affairs 235en_US
dc.subject.jelE32en_US
dc.subject.jelE21en_US
dc.subject.ddc330en_US
dc.subject.keywordbusiness cyclesen_US
dc.subject.keywordrisk aversionen_US
dc.subject.keywordrisk sharingen_US
dc.subject.keywordheterogeneityen_US
dc.subject.stwKonjunkturen_US
dc.subject.stwSoziale Kostenen_US
dc.subject.stwRisikoaversionen_US
dc.subject.stwVersicherungen_US
dc.subject.stwProduktivitäten_US
dc.subject.stwTheorieen_US
dc.titleHeterogeneous Risk Preferences and the Welfare Cost of Business Cyclesen_US
dc.typeWorking Paperen_US
dc.identifier.ppn587308427en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
Appears in Collections:Discussion Papers in Economics, Woodrow Wilson School of Public and International Affairs (WWS), Princeton University

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