Jinhui Bai, Associate Professor of Economics at the School of Economic Sciences, Washington State University. He obtained his Ph.D. degree in Economics from Yale University in 2006, the master degree of Economics from Peking University in 2001 and B.A. of Economics from Renmin University of China in 1998. His Research Fields are Macroeconomics, Political Economy, Theory.

This study explores the welfare and distributional effects of fiscal volatility using a neoclassical stochastic growth model with incomplete markets. In our model, households face uninsurable idiosyncratic risks in their labor income and discount factor processes, and we allow aggregate uncertainty to arise from both productivity and government purchases shocks. We calibrate our model to key features of the U.S. economy, before eliminating government purchases shocks. We then evaluate the distributional consequences of the elimination of fiscal volatility and find that, in our baseline case, welfare gains increase with private wealth holdings.