When microeconomic adjustment is lumpy, the VAR-estimated persistence of the corresponding aggregated variable is downward biased. The extent of this bias decreases with the level of aggregation, yet convergence is very ...

We study constrained efficient aggregate risk sharing and its consequence for the behavior of macro-aggregates in a dynamic Mirrlees’s (1971) setting. Privately observed idiosyncratic productivity shocks are assumed to be ...

In economies characterized by both aggregate and privately observed idiosyn- cratic risks we show that constrained e¢cient allocations may display non-trivial dependence on aggregate shocks. Using two period versions of ...

In this paper we provide a framework to study the aggregate dynamic behavior of an economy where individual units follow (S, s) policies. We characterize structural and stochastic heterogeneities that ensure convergence ...

We investigate social insurance in a dynamic Mirrlees' (1971) economy for which each agent's labor market productivity is the product of her stochastic and privately observed ability and an aggregate, publicly observed, ...

This paper is an attempt to enrich the characterization of the sluggish behavior of the aggregate price level. Our contribution to this vast literature is to explicitly consider microeconomic heterogeneity and its ...

We assess the existence of a long run stationary distribution of expected util- ities in a dynamic Mirrlees’s (1971) incentive structure when the government has only imperfect record keeping and the economy is subject to ...

We study optimal allocations in an environment in which money is essential due to lack of commitment and anonymity of individuals. Because the economy features aggregate preference shocks, we apply a notion of implementability ...