This paper investigates whether the secular process of Structural Change - i.e. the broad shift away from manufacturing and towards services during the post war period - can simultaneously account for the Great Moderation and provide a mechanism for its unraveling. Based on detailed US sectoral...

of the noise distribution, utility function and reservation utility.

remainder in cash. The account features state-dependent rebalancing and time-dependent vesting. It is constantly rebalanced so that the equity fraction remains above a certain threshold; this threshold sensitivity is typically increasing over time even in the absence of career concerns. The...

We consider a dynamic Mirrlees economy in a life cycle context and study the optimal insurance arrangement. Individual productivity evolves as a Markov process and is private information. We use a first order approach in discrete and continuous time and obtain novel theoretical and numerical...

which takes the form of a minimum liquidity requirement coupled with monitoring of the quality of liquid assets. We establish the robustness of our insights when the set of bailout instruments is endogenous and characterize the structure of optimal bailouts.