scholarly journals Explaining Rising Wage Inequality: Explorations with a Dynamic General Equilibrium Model of Labor Earnings with Heterogeneous Agents

10.3386/w6384 ◽  
1998 ◽  
Author(s):  
James Heckman ◽  
Lance Lochner ◽  
Christopher Taber
Keyword(s):  
General Equilibrium ◽  
Wage Inequality ◽  
Equilibrium Model ◽  
Heterogeneous Agents ◽  
Dynamic General Equilibrium ◽  
General Equilibrium Model ◽  
Dynamic General Equilibrium Model ◽  
Labor Earnings

Risk Shocks

2014 ◽  
Vol 104 (1) ◽  
pp. 27-65 ◽  
Author(s):  
Lawrence J. Christiano ◽  
Roberto Motto ◽  
Massimo Rostagno
Keyword(s):  
Business Cycle ◽  
General Equilibrium ◽  
Equilibrium Model ◽  
Dynamic General Equilibrium ◽  
General Equilibrium Model ◽  
Cross Sectional ◽  
Dynamic General Equilibrium Model ◽  
The Business Cycle ◽  
Idiosyncratic Uncertainty ◽  
Over Time

We augment a standard monetary dynamic general equilibrium model to include a Bernanke-Gertler-Gilchrist financial accelerator mechanism. We fit the model to US data, allowing the volatility of cross-sectional idiosyncratic uncertainty to fluctuate over time. We refer to this measure of volatility as risk. We find that fluctuations in risk are the most important shock driving the business cycle. (JEL D81, D82, E32, E44, L26)

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