This paper offers several appendices for the article: the integration principle applied to the baseline model, the computational algorithm for the baseline model, calculating the welfare gain, algorithm for the model with short- and long-term unemployment, as well as additional result tables.

We investigate the welfare effects of eliminating business cycles in a model with substantial consumer heterogeneity. The heterogeneity arises from uninsurable and idiosyncratic uncertainty in preferences and employment status. We calibrate the model to match the distribution of wealth in U.S....