SFB 649 Discussion Paper 2006-070 The Welfare Enhancing Effects of a Selfish Government in the Presence of Uninsurable, Idiosyncratic Risk R. Anton Braun* Harald Uhlig** * Faculty of Economics, University of Tokyo, Japan ** Institute of Economic Policy I,...

This paper characterizes the stationary equilibrium of a continuous-time neoclassical production economy with capital accumulation in which households can insure against idiosyncratic income risk through long-term insurance contracts. Insurance companies operating in perfectly competitive...