Quizzes
Quiz One - Lecture Two, Sept 30th - Given basic set-up - What is an efficient allocation. If allocation isn't efficient, what can we conclude? What is CE for the economy Quiz Two - Lecture Five, Oct 11th - Given basic set-up - What is AD CE? What is SoM CE? Quiz Three - Lecture Fourteenth, Nov 9th - Given preferences with disutility to working, write down social planner's problem and find the two conditions that characterize the optimal solution Quiz Four - Nov 23rd - Define a recursive competitive equilibrium of the neo-classical growth model (covered Nov 18th) Mid-Term - Wed Oct 28th
paraphrased from the professor
In the mid-term you'll be asked to 'solve problems'. Your questions will be similar to the neoclassical growth model, probably adding some twists. The challenge will be getting notation correct, setting up the maximization problem properly, going through the analysis...
A likely set-up; you're given a model or description of an economy. Write down the maximization problem that correctly describes an allocation in that economy -- then solve it. Could be asked to do many things, continuous time, perhaps speed of convergence stuff. You can expect instructions to be as detailed as those found in problem sets -- with far less algebra intensive, luck & experience type questions. [Gorry, 10/19]
The mid-term is going to cover, probably, sequence problems with the neoclassical growth model and twists, such as you saw in the first few homework assignments. Maybe changing preferences around, adding another durable consumption, different types of investment. Simply, the neoclassical growth model with twists in continuous and discrete time. [Gorry 10/19]
Remember the "incantations"
A Competitive Equilibrium is a list of sequences/functions .....
And a Steady State is a level of capital such if k_0 = k*, then.....
In all honesty, it didn't turn out all that helpful
| Lectures & Problem SetsLecture One Sept 28th
Course Outline. Resource Allocation Problems. Competitive Equilibrium (CE) introduced. Inserting trade-offs makes model more interesting. NeoClassical Growth Model: consumption, technology, endowments.
Lecture Two Sept 30th
Quiz One. Neoclassical Growth Model. Does a solution exist? is it unique? Is there a steady state? Solving the Planner's Problem; First Order Conditions, find the Steady State. Lastly, the Definition of Competitive Equilibrium.
Basics of the Neoclassical Growth model and solving the Social Planner problem in discrete time. Extensions & complications.
Lecture Three Oct 7th
Competitive Equilibrium, in the Arrow-Debreu Neoclassical Growth Model. Setting up the CE problem, then the steps toward the solution. Finding prices, k* and c*
Problem Set 2 Due Oct 9th Fri
Competitive Equilibrium (CE) in discrete time. Arrow Debreu (AD) compared to Sequence of Markets (SoM) Lecture Four Oct 9th
Steady State of Arrow-Debreu model. SS in CE. Growth Model dynamics. Finding the steady state. Continuous Time introduced. State (stock) & Control (flow) variables. Step-by-step recipe the find Necessary & Sufficient Conditions. Lecture Five Oct 11th Quiz Two. Problem Set Two review. Previous lecture continued. "Necessary & sufficient conditions", in continuous time, setting up the Hamiltonian. An example using the neoclassical growth model approached via the social planner's problem. Solving optimality conditions, for the steady state. Investigating dynamics with phase diagrams.
Problem Set 3 Due Oct 14th Wed Lecture Six Oct 14th Continuous time phase diagrams continued. Given initial capital, what does the maximization problem look like on our phase diagram? answer: trying to land on the saddle path. Speed of convergence. Seeking the solution in the time domain & example. Seeking the solution in the state variable domain. Local stability and speed of convergence in state domain - law of motion & half-life.
Lecture Seven Oct 19th Continuing the Previous Lecture. Looking more deeply into the Steady State. Stable vs Unstable solutions. Convincing ourselves that the infinite time, continuous time maximization problems we have are well posed and the solutions we find are in fact the solutions we're looking for. A comprehensive math review of this problem. Lecture Eight Oct 21st Comparative Statics with a simple model. Looking at the trade-off of consumption today vs consumption tomorrow, and the trade-off between Consumption & Leisure. Also, Competitive Equilibrium in Continuous Time Problem Set 4 due Oct 23 Fri
Lecture Nine Oct 23rd Problem Set Review. Problem Set Three, Question Three: Arrow Debreu Competitive Equilibrium vs Sequence of Markets. Problem Set Four, Question Two: CE vs Social Planner with pollution. Lecture Ten Oct 26th (Review) Cover answers to Problems Set Four No. One, discusses and set-up Problem Set Three No. Three. (Lecture) Introduce Government and Taxes to the
Neoclassical Growth Model. First introducing capital
taxation and transfer payments, hinting at other forms of taxation & government expenditure. Mid-Term Exam Oct 28th Wed We Take Our Mid-Term. Not quite as hard as we expected. But still rough, & long. (that's what she said) Solutions - #1 is part one in problem set five. #2 gone over in class Oct 30. 80/100 = A. 60/100 = passing. Lecture Eleven Oct 30th Fri (Review) Mid-Term Question Two (Question One appears on our next problem Set). (Lecture) Measuring Welfare Consequence of Public Policy. We also discuss the Prescott Paper “Why do Americans Work So Much More than
Europeans?" Lecture Twelve Nov 2nd Mon Picking up on the Prescott paper and taxation. Frisch Labor Supply Elasticity. Introducing Growth into the Neo Classical Growth Model. Lecture Thirteen Nov 4th (Lecture note are sub-standard) Lucas Paper. Economic Growth. Dynamic Programming Introduced. Lecture Fourteen Nov 9th Mon Quiz Three. They Dynamic Programming Problem and Bellman Equation Intro. Setting up finite horizon Bellman equation. Recipe for Solving Infinite Horizon Dynamic Programming Problems. Two examples of setting up Bellmans - social planner growth model & the growth model with habit formation No Class! Nov 11th Wed Veteran's Day. Thanks Chris Limnios. Problem Set 6 due Nov 13 Fri Lecture Fifteen Nov 13th Fri | Navigation Tip If you're looking for a specific, nuanced topic, try the Search this site bar above. I did my best to ensure that all notes and problem sets are indexed. PDF File Opening Errors I've been using Google Docs' PDF viewer to link to the resources we have here. Unfortunately, it's not always the most stable. I've seen it fail to load the preview numerous times. If you have this error, try viewing the link in a different browser or downloading the file to your computer. Errors & Suggestions? - Just Let Me Know Textbooks BARRO [pdf book] RECURSIVE MACROECONOMIC THEORY [.PDF] by Thomas Sargent and Lars Ljungqvist, 2nd edition (1106 pages) Note, we are working out of the 2nd ed. Red Cover RECURSIVE METHODS IN ECONOMICS DYNAMICS STOKEY & LUCAS [pdf book 19.4MB] - [pdf solutions manual] Some files are too large to link to. Email me if you want a pdf. economicurtis@gmail.com Other Readings What Do Economists Do? [.PDF] Robert Lucas, 1988, 6 pages A farewell to UofC graduating economists The Theory of Money [Online] by Grard Debreu, 1959 (100 pages) Back From The Brink [.PDF] by Christina Romer, Sept 2009 (16 page) Dynamic Optimization in Continuous-Time Economic Models (a guide for the perplexed) [.PDF] by Maurice Obstfeld - April 1992 (21 pages)
Why Do Americans Work So Much More Than Europeans? by Edward Prescott - July 2004 (13 pages) [PDF] On The Mechanics of Economic Development by Robert Lucas, Feb 1988 [PDF] Credits Problem Sets - Three Groups contributed. Their solutions are given here with permission from at least one group member. ~The League of Nations (LoN): Linh Bun, David Florian-Hoyle, Jacopo Magnani, Yuhan Xue, Yabin Wang ~My Group (My): Maggie apRoberts-Warren, Carmen Flernandez-Lara, Kat Lopiccalo, Jesse Bigley, Curtis Kephart, A. Christopher Limnios ~Other Group (the others): Olya Rud, Jongchan Lee, Glen Wolf, Kevin McLaughlin & Benjamin Linus |