The consumption smoothing benefits of unemployment insurance
An assessment of the benefits of unemployment insurance (UI) was made using data from the Panel Study of Income Dynamics which contains information on food consumption covering the period from 1968 to 1987. Results indicate that (UI) enables the government to significantly level individual consumption during intervals of unemployment, when viewed within the context of a specific social insurance program. The said consumption smoothing effect is considerable, with estimates revealing that unemployment consumption would decline by as much as 22% in the absence of UI.
Publication Name: American Economic Review
Macroeconomic uncertainty, precautionary saving, and the current account
An optimizing model of an open economy, which is based on the standard intertemporal model of the current account, was created to evaluate the effects of macroeconomic uncertainty on the current account. Results reveal that agents will attempt to increase external saving during instances of high macroeconomic unpredictability. Macroeconomic unpredictability is seen to be a significant factor in influencing current account dynamics since economic fluctuations such as oil price changes may not affect developed countries in the same manner.
Publication Name: Journal of Monetary Economics
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