We propose a method to solve models with heterogeneous agents and aggregate uncertainty. The law of motion describing aggregate behavior is obtained by explicitly aggregating the individual policy rule. The algorithm is simpler and faster than existing algorithms that rely on parameterization of...

This thesis contains several lines of research conducted during my four years at the European University Institute. It deals with two distinct topics in the area of recursive economies, developed in three chapters. The first chapter considers a general class of recursive models in which...

This paper studies a model of optimal redistribution policies in which agents face unemployment risk and in which savings may provide partial self-insurance. Moral hazard arises as job search effort is unobservable. The optimal redistribution policies provide new insights into how an...

This paper analyzes the feedback between firms' hiring decisions and the demand for their products in environments in which agents are not well insulated from the financial consequences of unemployment. In such an environment, an increase in (the chance of ) becoming unemployed increases...

This paper analyzes the feedback between firms' hiring decisions and the demand for their products in an environment in which agents are poorly insulated from the financial consequences of unemployment. In such an environment, an increase in the risk of remaining unemployed for a long time...

This paper shows that large fiscal multipliers arise naturally from equilibrium unemployment dynamics. In response to a shock that brings the economy into a liquidity trap, an expansion in government spending increases output and causes a fall in the unemployment rate. Since movements in...

This paper shows that large fiscal multipliers arise naturally from equilibrium unemployment dynamics. In response to a shock that brings the economy into a liquidity trap, an expansion in government spending increases output and causes a fall in the unemployment rate. Since movements in...

This paper shows that large fiscal multipliers arise naturally from equilibrium unemployment dynamics. In response to a shock that brings the economy into a liquidity trap, an expansion in government spending increases output and causes a fall in the unemployment rate. Since movements in...