This study examines the response of aggregate consumption to active labor market policies that reduce unemployment. We develop a dynamic general equilibrium model with heterogeneous agents and uninsurable unemployment as well as policy regime shocks to quantify the consumption effects of policy....

This paper quantifies the effect of time-varying employment risks on the fluctuations of aggregate consumption in a dynamic general equilibrium with incomplete markets. A government's redistribution policy through provision of unemployment insurance can cause a positive correlation between...

Using a general equilibrium model of a small developing economy, the authors demonstrate that the introduction of asymmetric adjustment costs makes the rate of urban employment respond to an exogenous shock in the aggregate capital endowment, raising the possibility of several counter-intuitive...