This paper builds a welfare measure encompassing household disposable income, unemployment and longevity, while using two different sets of “shadow prices” for non-income variables. The valuations of vital and unemployment risks estimated from life satisfaction data (“subjective shadow...

Theoretical studies have shown that under unorthodox assumptions on preferences and production technologies, collateral constraints can act as a powerful amplification and propagation mechanism of exogenous shocks. We investigate whether or not this result hold under more standard assumptions....

This paper studies the role of collateral constraints in transforming small monetary shocks into large persistent output fluctuations. We do this by introducing money in the heterogeneous-agent real economy of Kiyotaki and Moore (1997). Money enters in a cash-in-advance constraint and is...