Liquidity and Insurance for the Unemployed
---- Acknowledgements -----
We are grateful for comments from Daron Acemoglu, George-Marios Angeletos, Hugo Hopenhayn, Narayana Kocherlakota, Samuel Kortum, Ellen McGrattan, Richard Rogerson, two anonymous referees, and numerous seminar participants on this paper and an earlier version entitled "Optimal Unemployment Insurance with Sequential Search." Shimer and Werning's research is supported by grants from the National Science Foundation and the Sloan Foundation. Werning is grateful for the hospitality from the Federal Reserve Bank of Minneapolis.