I consider a real business cycle model in which agents have private information about an idiosyncratic shock to their value of leisure. I consider the mechanism design problem for this economy and describe a computational method to solve it. This is an important contribution of the paper since...

In this paper, I explore how optimal aggregate dynamics can be shaped by the presence of moral hazard in unemployment insurance. I also analyze the optimal provision of unemployment insurance and the implications for the amount of cross-sectional heterogeneity. The economy that I consider embeds...

I consider a neoclassical growth model with endogenous labor supply in which agents have private information about their idiosyncratic value of leisure. A key assumption is that these shocks follow a persistent stochastic process over time. For this economy I solve the economy-wide mechanism...

I consider a real business cycle model in which agents have private information about the i.i.d. realizations of their value of leisure. For the case of logarithmic preferences I provide an analytical characterization of the solution to the associated mechanism design problem. Moreover, I show a...

This paper introduces a general method for computing equilibria with heteroge- neous agents and aggregate shocks that is particularly suitable for economies with private infor- mation. Instead of the cross-sectional distribution of agents across individual states, the method uses as a state...

Although job vacancies have increased quite significantly since mid-2009, the unemployment rate has not declined significantly. This article analyzes the matching efficiency of jobs and workers in U.S. labor markets and its impact on the behavior of the unemployment rate and other labor market...

The authors present a model in which anticipated future tax cuts, like those promised during the 2000 U.S. presidential campaign, generate a contraction in economic activity with some of the atypical features observed during the 2001 recession (such as its relatively strong consumption and home...

I consider a real business cycle model in which agents have private information about the i.i.d. realizations of their value of leisure. For the case of logarithmic preferences I provide an analytical characterization of the solution to the associated mechanism design problem. Moreover, I show a...

Fixed term employment contracts have been introduced in a number of European countries as a way to provide flexibility to economies with high employment protection levels. We introduce these contracts into the equilibrium search model in Alvarez and Veracierto (1999), a version of the Lucas and...

This paper analyzes the effects of fixed-term contracts using a version of the Lucas and Prescott island model with undirected search. A fixed-term contract of length J is modeled as a tax on separations of workers with tenure higher than J . While in principle these policies require a very...