This paper extends the recent recursive contract literature on optimal unemployment insurance and optimal welfare-to-work programs in order to study the constrained-efficient dynamic contract between government and unemployed worker when a costly "training technology" is available. We first...

In this paper, we study the impact on the aggregate economy of changes in individual risk and insurance. To this end, we use the analytical framework developed in Heathcote, Storesletten and Violante (2008). Our main finding is that insurable risk increases TFP by improving the allocation of...

We develop a model featuring search frictions and a nondegenerate labor supply decision along the extensive margin, and argue that it does a reasonable job of matching labor market flows between employment, unemployment and out of the labor force. Persistent idiosyncratic productivity shocks...

This paper constructs a dynamic general-equilibrium model of the world economy and the global climate system. The goal of the paper is to characterize quantitatively the transition of the world economy, including welfare assessments, to a steady state with zero emissions of carbon. There is a...

We consider a decentralized equilibrium of a 1-region, global neoclassical growth model with non-renewable exhaustible resources and optimizing agents. The resource generates energy, which is essential for producing final output. Its use generates externalities by affecting the climate. The...

We build a model that incorporates both labor supply and frictions and use it to assess the effects of various tax and transfer programs on aggregate employment and unemployment. In particular, we assess the debate between Prescott and Ljungqvist and Sargent about the relative importance of...