Abstract (eng)
In the absence of a centralized goods market and perfect credit markets, precautionary savings, driven by pessimistic expectations, can lead to a lack of aggregate demand and involuntary unemployment in steady state, whereas optimistic expectations would keep the economy in a steady state with full employment. While the steady state with full employment is efficient, the steady state with unemployment is not. Once the economy is in the inefficient steady state, under certain conditions there is no equilibrium path which leads back to the efficient steady state. This result was shown by Chamley (2014), assuming that agents face idiosyncratic preference shocks of a certain probability. I show that this result is robust to changes in the probability of preference shocks. It holds for nearly all probabilities of these shocks. In addition, I show that rare preference shocks lead to higher unemployment in the inefficient steady state than frequent shocks. This is because the higher the probability of idiosyncratic shocks, the higher the fraction of agents with a high propensity to consume. A higher fraction of agents with a high propensity to consume leads to less unemployment in the inefficient steady state.