The Welfare Cost of Business Cycles in an Economy with Nonclearing Markets

In this paper we measure the welfare cost of fluctuations in a simple representative agent economy with nonclearing markets. The market friction we consider involves price rigidities and a voluntary exchange rationing scheme. These features are incorporated into an otherwise standard neoclassical growth model. We show that the frictions we introduce make the losses from fluctuations much bigger than in a frictionless environment.

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Year of publication:	2004
Authors:	Puch, Luis A. ; Portier, Frank
Institutions:	Facultad de Ciencias Económicas y Empresariales, Universidad Complutense de Madrid
Subject:	Cost of business cycles \| Nonclearing markets \| Dynamic general equilibrium

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Extent:	application/pdf
Series:	Documentos de Trabajo del ICAE.
Type of publication:	Book / Working Paper
Language:	English
Notes:	17 pages
Classification:	E32 - Business Fluctuations; Cycles ; C63 - Computational Techniques ; C68 - Computable General Equilibrium Models
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005106816