Notes on Macroeconomic Theory
Models. This chapter deals with the most simple kind of macroeconomic model, ... There is one period and N consumers, who each have preferences given by the utility ... In a competitive equilibrium, we can at most determine all relative prices, so the ... Here, ks is the quantity of capital that the consumer rents to firms, (1.2).
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Real Macroeconomic Theory
2.1.1 The aggregate production function and its inputs . . . . . . . . . . . 12 ... 5 Competitive equilibrium in dynamic models. 71 ... 5.2.4 Neoclassical production again, with capital accumulation by firms . . 86 ... 6.3.3 General equilibrium under uncertainty: multiple-period model with ..... 14.2.1 Wealth effects on labor supply .
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Real Macroeconomic Theory - School of Arts & Sciences
2.1.1 The aggregate production function and its inputs . . . . . . . . . . . 12 ... models. 71. 5.1 Sequential competitive equilibrium . ... 5.2.4 Neoclassical production again, with capital accumulation by firms . . 86 ... 6.3.3 General equilibrium under uncertainty: multiple-period model with ..... 14.2.1 Wealth effects on labor supply .
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Macroeconomic Theory - Econ 4310 Lecture 1
Trade period by period ... A simple, static general equilibrium model. Firms. Production function: y = zf (k,n). (4) ... A simple, static general equilibrium model. Competitive equilibrium. 1. Each household chooses c and l optimally given w, r and K/N. Eq: ... Caveats: No external effects, no collective goods, no increasing returns,.
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Equilibrium in a Model with Overlapping Generations
Fall 2012. Dynamic Macroeconomic Analysis (UAM). OLG. Fall 2012. 1 / 69 ... physical capital. ▷ Temporary shocks to TFP have persistent effects because they affect ... capital. Given that the agents only live for two periods, all saving is done by ... Capital is owned by households and rented to firms in a competitive market.
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Macroeconomic Theory: A Dynamic General Equilibrium Approach
Consider the following centrally-planned model with labor yt. = ct + it. Akt+1 ... (b) What is the effect of the presence of non-labor augmenting technical progress? 3.3. ... 4.3 (a) Derive the dynamic path of optimal household consumption when the ..... (a) Find the optimal price Pt(i)* if the firm maximizes profits period by period ...
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Download Sample pages 2 PDF - Springer
produced in one period and then used in production in the following period.1 To ... flows to households that own and rent physical capital to firms. ... The first step in developing a general equilibrium model of output and income .... the final requirement of a competitive equilibrium: market clearing. ... macroeconomic courses.
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Open Economy Macroeconomics - Columbia University
Jul 13, 2016 ... 4.2.1 Households in the Decentralized Economy . .... 5.2 An Open-Economy RBC Model With Stationary And Nonstationary Technology Shocks ...
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Graduate Macro Theory II: Fiscal Policy in the RBC Model
We will analyze the effects of changes in government spending and talk about an important ... the household owns the capital stock and leases it to firms. ... A competitive equilibrium is a set of prices (rt,Rt,wt) and allocations (Ct,Kt+1,Nt,Bt+1 ,Dt+1) ... Tt = Gt each period and we'd get the same equilibrium dynamics. All that ...
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14.452 Economic Growth: Lectures 5 and 6 - MIT Economics
Nov 7, 2014 ... Whether the (competitive) equilibria of growth models can be. “improved ... unit interval [0,1]. Emphasize that each household is infinitesimal and will have no effect .... Most growth and macro models assume that individuals have an ... Imagine an individual who lives for one period and has a single offspring ...
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CHAPTER 1 - Tufts University
macroeconomic goals: 1) living standards growth, 2) stability and security, .... Economic activities of individual firms, households, and other organizations ... The economic crises was short lived and markets quickly adjusted back to equilibrium. ..... What does the basic neoclassical, or traditional, model of economics assume ...
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Macroeconomic Models of Heterogeneous Agents
for individual households, firms, industries, and markets. The myth ... one has to be careful about the life-cycle effect. ... Instead, they can accumulate one type of asset (money in Bewley, ... Krusell-Smith model: Recursive competitive equilibrium. Thinking ... All the next-period state variables are functions (which can be.
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Equilibrium Credit Spreads and the Macroeconomy
premia and asset prices.1 By contrast, macro models that exploit the role of .... in each period firms also have the opportunity to invest and increase next .... impact of the possibility of default on the returns to equity holders. .... by a competitive representative agent household, that derives utility from the consumption flow of.
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A simple macro dynamic model with endogenous saving rate: the
Competitive equilibrium: households and firms take prices as given (prices are ... household has a time endowment each period, we normalize it to 1.
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Understanding the macroeconomic effects of working capital in the
Apr 18, 2011 ... 1. 1Bank of England. 2University of Warwick, Centre for Economic .... introduced individual components in general equilibrium models. ... firms' and households' use of money via cash in advance constraints ..... where yj is gross output of firm j, kj is firm j's end-of-period capital ..... We impose that competition.
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2. DYNAMIC EQUILIBRIUM MODELS I: TWO-PERIOD ECONOMIES
several periods, as well as growth, we need a dynamic, equilibrium model. ... In other words, we define a competitive equilibrium as a price system {p1,p2} and ... takes more than one unit of future consumption to compensate the agent – in the sense ... To solve these models first work out the household planning problem.
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The Macroeconomic Effects of Distortionary Taxation - Federal
This paper develops a model of competitive economy which is used to study the effect that ... One reason for this limited success may be the exclusion of monetary or ... with the decision rules of the households and firms, ... rent period utility depends on the number of goods consumed, government expenditures,. Gº , and ...
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MULTIPLE EXPECTATIONAL EQUILIBRIA UNDER
investment can have multiple rational expectations equilibria: one is ... returns to scale, and monopolistic competition makes increasing returns consistent ... equilibrium output in the future is a function of the future capital ... He constructs a model in which firms in ... In this economy firms and households live for two periods.
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Aggregate Dynamics in an Economy with Optimal Long-term - LSE
equilibrium dynamics of macro-economic quantities and asset prices. ... and firm insiders in a general-equilibrium model of investment1. ... Recessions are also periods during which firm exit rates increase. .... This allows me to study the effect of aggregate shocks in an economy populated ..... I assume perfectly competitive.
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Understanding the Effects of Government Spending on Consumption∗
In particular, though most macroeconomic models predict that a rise in govern- ... generating a negative wealth effect that induces a cut in consumption.1 In the IS- LM .... equilibrium response to a government spending shock under alternative .... The economy consists of two types households, a continuum of firms producing ...
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