Ellison, Martin; Sargent, Thomas J. - In: American Economic Journal: Macroeconomics 7 (2015) 2, pp. 40-57
The welfare cost of random consumption fluctuations is known from De Santis (2007) to be increasing in the level of uninsured idiosyncratic consumption risk. It is known from Barillas, Hansen, and Sargent (2009) to increase if agents care about robustness to model misspecification. We calculate...