Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/230382
Authors: 
Veracierto, Marcelo
Year of Publication: 
2020
Series/Report no.: 
Working Paper No. 2020-04
Abstract: 
I consider a real business cycle model in which agents have private information about the i.i.d. realizations of their value of leisure. For the case of logarithmic preferences I provide an analytical characterization of the solution to the associated mechanism design problem. Moreover, I show a striking irrelevance result: That the stationary behavior of all aggregate variables are exactly the same in the private information economy as in the full information case. Numerical simulations indicate that the irrelevance result approximately holds for more general CRRA preferences.
Subjects: 
Risk sharing
business cycles
private information
social insurance
optimal contracts
heterogeneous agents
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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