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Whether, When and How to Extend Unemployment Benefits: Theory and Application to COVID-19
Stockholms universitet, Samhällsvetenskapliga fakulteten, Institutet för internationell ekonomi.
2021 (engelsk)Rapport (Annet vitenskapelig)
Abstract [en]

We investigate the optimal response of unemployment insurance to economic shocks, both with and without commitment. The optimal policy with commitment follows a modified Baily-Chetty formula that accounts for job search responses to future UI benefit changes. As a result, the optimal policy with commitment tends to front-load UI, unlike the optimal discretionary policy. In response to shocks intended to mimic those that induced the COVID-19 recession, we find that a large and transitory increase in UI is optimal; and that a policy rule contingent on the change in unemployment, rather than its level, is a good approximation to the optimal policy.

sted, utgiver, år, opplag, sider
2021.
Serie
CEPR Discussion Paper Series ; 15748
HSV kategori
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URN: urn:nbn:se:su:diva-191073OAI: oai:DiVA.org:su-191073DiVA, id: diva2:1535124
Tilgjengelig fra: 2021-03-08 Laget: 2021-03-08 Sist oppdatert: 2022-02-25bibliografisk kontrollert

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