Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/264321 
Year of Publication: 
2022
Series/Report no.: 
Working Paper No. WP 2022-07
Publisher: 
Federal Reserve Bank of Chicago, Chicago, IL
Abstract: 
In this paper, I explore how optimal aggregate dynamics can be shaped by the presence of moral hazard in unemployment insurance. I also analyze the optimal provision of unemployment insurance and the implications for the amount of cross-sectional heterogeneity. The economy that I consider embeds the Hopenhayn-Nicolini unemployment insurance model into a real business cycle model with search frictions. In a calibrated version I find that the presence of private information has large effects on optimal aggregate steady-state dynamics but not on aggregate fluctuations. In addition, I find that optimal consumption replacement ratios are approximately independent of the business cycle.
Subjects: 
Private information
Mechanism Design
Business Cycles
Moral hazard
Unemployment Insurance
JEL: 
D82
E32
J64
J65
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size
556.14 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.