This paper considers the macroeconomic implications of a se t of empirical studies finding a high degree of dispersion in preference heterogeneity. It develops a model with risk aversion heterogeneity, uninsurable idiosyncratic income risk, and self-selection into risky jobs to quantify their...

This paper formally compares the fit of various versions of the incomplete markets model with aggregate uncertainty, relying on a simple Bayesian empirical framework. The models differ in the degree of households' heterogeneity, with a focus on the role of preferences. For every specification,...

I investigate whether the popular Krusell and Smith algorithm used to solve heterogeneous-agent economies with aggregate uncertainty and incomplete markets is likely to be subject to multiple self-fulfilling equilibria. In a benchmark economy, the parameters representing the equilibrium...

This paper discusses a series of Monte Carlo experiments designed to evaluate the empirical properties of Heterogeneous-Agent macroeconomic models in the presence of sampling variability. The calibration procedure leads to the welfare analysis being conducted with the wrong parameters. The...

A simple Monte Carlo calibration approach is implemented in a GE model with uninsurable employment risk to quantitatively study the optimal replacement rate of a public unemployment insurance (UI) scheme. The optimal UI sampling distribution is found to be bimodal.

This paper develops a dynamic general equilibrium model to identify the impact of worse labour market conditions on the property crimes involvement of black American males. The related empirical evidence unambiguously shows higher participation in crime for black than for white males. In 1996,...

to be quantitatively small.

This paper studies the effect of hard drugs addiction on property crimes and hard drugs selling in the US. A dynamic equilibrium model quantifying how much of the observed property crime rate is accounted for by hard drugs addiction is specified and estimated. The model is framed in both a...

We study how the heterogeneity of information impacts the efficiency of the business cycle and the design of optimal fiscal and monetary policy. We do so within a model that features a standard Dixit-Stiglitz demand structure, introduces dispersed private information about the underlying...

This paper is a quantitative, equilibrium study of the insurance role of severance pay when workers face displacement risk and markets are incomplete. A key feature of our model is that, in line with an established empirical literature, job displacement entails a persistent fall in earnings upon...