Welfare Cost of Business Cycles with Idiosyncratic Consumption Risk and a Preference for Robustness
研究了当人们既面临无法保险的个体消费风险又担心经济模型可能错误时，经济周期波动带来的福利损失有多大，发现两种风险会相互放大。
The welfare cost of random consumption fluctuations is known from De Santis (2007) to be increasing in the level of uninsured idiosyncratic consumption risk. It is known from Barillas, Hansen, and Sargent (2009) to increase if agents care about robustness to model misspecification. We calculate the cost of business cycles in an economy where agents face idiosyncratic consumption risk and fear model misspecification, finding that idiosyncratic risk has a greater impact on the cost of business cycles if agents already fear model misspecification. Correspondingly, endowing agents with fears about misspecification is more costly when there is already idiosyncratic risk.