Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/31339
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dc.contributor.authorSalyer, Kevin D.en_US
dc.date.accessioned2006-01-04en_US
dc.date.accessioned2010-05-14T11:04:07Z-
dc.date.available2010-05-14T11:04:07Z-
dc.date.issued2005en_US
dc.identifier.urihttp://hdl.handle.net/10419/31339-
dc.description.abstractThis paper reproduces Lucas's analysis of the costs of business cycles in an economy with a low probability, crash state in consumption growth. For reasonable parameter values, it is shown that the presence of a crash state dramatically increases the costs ofconsumption volatility. Specifically, for relative risk aversion around 5, households in the US economy would, in aggregate, pay over $60 billion (approximately 3% of consumption in 2001) to eliminate consumption uncertainty. The conclusion is that stabilization policy is important not for its effects on second moments but inreducing kurtosis by lowering both the probability and severity of a crash state.en_US
dc.language.isoengen_US
dc.publisher|aDep. of Economics, Univ. of California |cDavis, Calif.en_US
dc.relation.ispartofseries|aWorking papers // University of California, Department of Economics |x05,5en_US
dc.subject.jelE10en_US
dc.subject.jelE32en_US
dc.subject.jelE60en_US
dc.subject.ddc330en_US
dc.subject.stwMakroökonomiken_US
dc.subject.stwKonjunkturen_US
dc.subject.stwSoziale Kostenen_US
dc.subject.stwTheorieen_US
dc.titleMacroeconomic priorities and crash statesen_US
dc.type|aWorking Paperen_US
dc.identifier.ppn505100908en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-

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