387hw7 - Economics 387. Banking and Financial...

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Unformatted text preview: Economics 387. Banking and Financial Intermediation. Spring 2002. Department of Economics, University of Texas Instructor: Dean Corbae, BRB 3.118, (o) 512-475-8530 email: [email protected], web: www.eco.utexas.edu/&corbae Homework #7 - Due 4/24/02 Two important issues in quantitative real business cycle theory are ampli- & cation and persistence of technological shocks. Kocherlakota (2000) consid- ers whether credit constraints can help address these issues. In this assign- ment you are to simulate the impulse response functions for a variant of the model considered in that paper. The household¡s problem in this economy is max { C t ,K t +1 ,L t +1 ,B t +1 } E − 1 ∞ X t =0 β t log( C t ) s.t.C t + K t +1 + Q t L t +1 − B t +1 ≤ θ t K γ 1 t L γ 2 t +(1 − δ ) K t + Q t L t − B t (1+ R ) (1) B t +1 ≤ Q t L t +1 (2) C t ≥ ,K t +1 ≥ ,L t +1 ≥ ,B ,K given, L = 1 ....
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This note was uploaded on 08/06/2008 for the course ECON 387 taught by Professor Corbae during the Spring '07 term at University of Texas at Austin.

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387hw7 - Economics 387. Banking and Financial...

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