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dc.contributor.authorLee, Jae Wonen_US
dc.date.accessioned2011-11-14en_US
dc.date.accessioned2012-06-25T11:57:23Z-
dc.date.available2012-06-25T11:57:23Z-
dc.date.issued2011en_US
dc.identifier.urihttp://hdl.handle.net/10419/59473-
dc.description.abstractThis paper analyzes the role of heterogeneous households in propagating shocks over the business cycle by generalizing a basic sticky-price model to allow for imperfect risk-sharing between households that differ in labor incomes. I show that imperfectly insured household consumption distorts household incentive to supply labor hours through an idiosyncratic income effect, which in turn generates strategic complementarities in price setting and thus amplifies business cycle fluctuations. This mechanism diminishes the role of nominal rigidities and makes sticky-price models more consistent with microeconomic evidence on the frequency of price changes.en_US
dc.language.isoengen_US
dc.publisherDep. of Economics, Rutgers, the State Univ. of New Jersey New Brunswick, NJen_US
dc.relation.ispartofseriesWorking Papers, Department of Economics, Rutgers, the State University of New Jersey 2011,32en_US
dc.subject.jelE13en_US
dc.subject.jelE30en_US
dc.subject.jelE44en_US
dc.subject.ddc330en_US
dc.subject.keywordheterogeneous householdsen_US
dc.subject.keywordPhillips curveen_US
dc.subject.keywordprice stickinessen_US
dc.subject.keywordstrategic complementaritiesen_US
dc.subject.keywordconsumption insuranceen_US
dc.titleAggregate implications of heterogeneous households in a sticky-price modelen_US
dc.typeWorking Paperen_US
dc.identifier.ppn672191377en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
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