Ríos-Rull (1995) uses a carefully calibrated overlapping generations model
and finds that the estimated importance of TFP shocks for business cycle fluctuations
does not change. Within this framework, Ríos-Rull (1994) then shuts
down financial markets, so physical capital holdings is the only way to save.
This extreme version of market incompleteness does not affect the estimate
of the importance of TFP shocks. Introducing uninsurable idiosyncratic risk
(see Krusell and Smith, 1998) does not affect the estimate either. Hansen and
Prescott (2005) deal with capacity utilization constraints that are occasionally
binding. With their introduction, the nature of the predictions for business
cycles changes a little, but in a way that results in observations being in even
closer conformity with theory