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Heterogeneous Agents and Uninsurable Idiosyncratic Employment Shocks in a Linearized Dynamic General Equilibrium Model
- Journal of Money, Credit, and Banking
- The Ohio State University Press
- Volume 38, Number 3, April 2006
- pp. 837-846
- 10.1353/mcb.2006.0048
- Article
- Additional Information
This paper proposes an analytical solution method for a dynamic general equilibrium model with heterogeneous agents and uninsurable idiosyncratic employment shocks. The solution method yields an approximate balanced growth path which depends on the unemployment rate and the unemployment risk, but which is independent of the ever-changing wealth distribution.