This paper studies fluctuations in a real business cycle model when there is a risk neutral agent present to offer insurance to workers. This economy is compared with one in which there is no risk neutral agent but labor is indivisible. In static models it is difficult to distinguish the risk...

This paper studies fluctuations in a real business cycle model when there is a risk neutral agent present to offer insurance to workers. This economy is compared with one in which there is no risk neutral agent but labor is indivisible. In static models it is difficult to distinguish the risk...

The reason why the assumption of a representative agent is so popular in the equilibrium business cycle literature is mainly that equilibrium allocations are derived by solving a concave programming problem, whereas once heterogeneity is introduced it is necessary to solve for weights on...

The key ingredients of real business cycle models are common. The market structure is perfectly competitive, the forcing process is a technology shock, and in most cases agents are identical. Textbook market structures are introduced in a real business cycle model. The market structures studied...

A modified version of the nominal contract developed by Gray (1976) and Fischer (1977) is introduced in a general equilibrium model with money which has been used in the real business cycle literature. Money is introduced in the model through cash-in-advance constraint. The contract studied is...

We incorporate nominal wage contracts and government into a quantitative general equilibrium framework. Thus, our model includes three types of shocks: a fiscal shock, a monetary shock, and a technology shock. We show that it is possible in this type of environment to generate a low correlation...

This is a survey of the main business cycle models that have been developed since the early '80s. It emphasizes the incorporation of money in the neoclassical growth model. It argues that money contributes substantially to aggregate fluctuations only if nominal rigidities are introduced in the...

A modified version of the nominal contract developed by Gray (1976) and Fischer (1977) is introduced in a general equilibrium model with money which has been used in the real business cycle literature. Money is introduced in the model through cash-in-advance constraint. The contract studied is...

We introduce procyclical labor and capital utilization, as well as costs of rapidly increasing employment, into a business-cycle model. Plausible variations in factor utilization enable us to explain observed variability of real GNP with considerably smaller economy-wide disturbances. The costs...

The key ingredients of real business cycle models are common. The market structure is perfectly competitive, the forcing process is a technology shock, and in most cases agents are identical. Textbook market structures are introduced in a real business cycle model. The market structures studied...