Recursive Utility, Endogenous Growth, and the Welfare Cost of Volatility /

This paper proposes a measure of the welfare cost of volatitliy derived from an endogenous growth model (AK) under uncertainty extended to the case of a recursive utility function which disentangles risk aversion from intertemporal elasticity of substitution. It encompasses a direct welfare cost of...

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Detalles Bibliográficos
Autor Principal: Pommeret, Aude
Outros autores: Epaulard, Anne
Formato: Revista
Idioma:English
Publicado: Washington, D.C. : International Monetary Fund, 2001.
Series:IMF Working Papers; Working Paper ; No. 2001/005
Acceso en liña:Full text available on IMF
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245 1 0 |a Recursive Utility, Endogenous Growth, and the Welfare Cost of Volatility /  |c Aude Pommeret, Anne Epaulard. 
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490 1 |a IMF Working Papers 
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520 3 |a This paper proposes a measure of the welfare cost of volatitliy derived from an endogenous growth model (AK) under uncertainty extended to the case of a recursive utility function which disentangles risk aversion from intertemporal elasticity of substitution. It encompasses a direct welfare cost of fluctuations and a welfare cost due to the endogeneity of the consumption. The total welfare cost of volatility increases with both the risk aversion and the intertemporal elasticity of substitution. For plausible values of the agent's preference parameters, the cost of volatility may be greater than measures bases on an exogenous process for consumption. 
538 |a Mode of access: Internet 
700 1 |a Epaulard, Anne. 
830 0 |a IMF Working Papers; Working Paper ;  |v No. 2001/005 
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