Risk and Ambiguity in Models of Business Cycles

We inject aggregate uncertainty - risk and ambiguity - into an otherwise standard business cycle model and describe its consequences. We find that increases in uncertainty generally reduce consumption, but they do not account, in this model, for either the magnitude or the persistence of the most recent recession. We speculate about extensions that might do better along one or both dimensions.

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Year of publication:	2014-07
Authors:	Backus, David ; Zin, Stanley E. ; Ferriere, Axelle
Institutions:	National Bureau of Economic Research (NBER)

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Extent:	application/pdf
Series:	NBER Working Papers.
Type of publication:	Book / Working Paper
Notes:	AP EFG published as Backus, David & Ferriere, Axelle & Zin, Stanley, 2015. "Risk and ambiguity in models of business cycles," Journal of Monetary Economics, Elsevier, vol. 69(C), pages 42-63. The price is Paper copy available by mail Number 20319
Classification:	D81 - Criteria for Decision-Making under Risk and Uncertainty ; E32 - Business Fluctuations; Cycles ; G12 - Asset Pricing
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10011265740