Business cycles in emerging economies display very volatile consumption and strongly countercyclical trade balance. We show that aggregate consumption in these economies is not more volatile than output once durables are accounted for. Then, we present and estimate a real business cycles model...

We consider the problem of optimal unemployment insurance (UI) in a repeated moral hazard framework. Unlike existing literature, unemployed individuals can secretly participate in a hidden labor market. This extension modifies the standard problem in three dimensions. First, it imposes an...

This paper extends the standard matching model by introducing a gap in separation costs between entrant and incumbent workers. We show that when this gap is omitted from the model, these costs do not improve the labor market volatility without introducing unrealistic unemployment responses to...