This paper explores the asset-price implications in economies where there is no direct insurance against idiosyncratic risks but there are other assets---such as a riskfree bond or equity---that can be used for self-insurance, subject to exogenously imposed borrowing limits. We analyze an...

We investigate the welfare effects of eliminating business cycles in a model with substantial consumer heterogeneity. The heterogeneity arises from uninsurable idiosyncratic uncertainty in preferences and employment status. We distinguish between short- and long-term unemployment. Long-term...

This paper builds a theory of the shape of the distribution of total-factor productivity (TFP) across countries. The distribution of productivity across countries is arguably twin-peaked in the data, and the proposed theory presents conditions under which twin-peakedness is an equilibrium...