GenEquil_SL

GenEquil_SL - Modern Macroeconomics Prof. Lutz Hendricks...

Info iconThis preview shows pages 1–13. Sign up to view the full content.

View Full Document Right Arrow Icon
Modern Macroeconomics Prof. Lutz Hendricks August 24, 2009 L. Hendricks () Modern Macro August 24, 2009 1 / 35
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
What Econ720 is about Macro is built around a small number of workhorse models : 1 Overlapping generations 2 Ramsey in continuous and discrete time aka standard growth model, Cass-Koopmans model, neoclassical growth model 3 Stochastic Ramsey model 4 Search and matching models We study basic versions of the models and the tools needed to analyze them. L. Hendricks () Modern Macro August 24, 2009 2 / 35
Background image of page 2
What is not covered 1 Any applications - this is a theory course. 2 Computational issues 3 Empirical issues. L. Hendricks () Modern Macro August 24, 2009 3 / 35
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Modern macro (Special Advertisement Section) . .. L. Hendricks () Modern Macro August 24, 2009 4 / 35
Background image of page 4
Modern macro The main point is: Macro is micro. L. Hendricks () Modern Macro August 24, 2009 5 / 35
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
An Old-Fashioned Macro Model Consumption function: C = C 0 + cY . Investment function: I = I 0 bi . Identity: Y = C + I + G . IS curve: ( 1 c ) Y = C 0 + I 0 + G bi Money demand: L = L 0 + kY di . Money supply: M / P . LM curve: M / P = L 0 + kY di L. Hendricks () Modern Macro August 24, 2009 6 / 35
Background image of page 6
The Keynesian Cross Y i LM IS L. Hendricks () Modern Macro August 24, 2009 7 / 35
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
IS-LM Implications 1 Government spending always raises output and employment. L. Hendricks () Modern Macro August 24, 2009 8 ± 35
Background image of page 8
IS-LM Implications 1 Government spending always raises output and employment. Constraints are missing (the supply side). 2 It is a function of the parameters c , k , b , d . L. Hendricks () Modern Macro August 24, 2009 8 ± 35
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
IS-LM Implications 1 Government spending always raises output and employment. Constraints are missing (the supply side). 2 It is a function of the parameters c , k , b , d . Which parameters are stable? 3 Expectations do not matter (or do they a/ect I 0 ?). 4 Consuming more ± saving less raises output. L. Hendricks () Modern Macro August 24, 2009 8 ± 35
Background image of page 10
IS-LM Implications 1 Government spending always raises output and employment. Constraints are missing (the supply side). 2 It is a function of the parameters c , k , b , d . Which parameters are stable? 3 Expectations do not matter (or do they a/ect I 0 ?). 4 Consuming more ± saving less raises output. The model lacks dynamics. This cannot be right! L. Hendricks () Modern Macro August 24, 2009 8 ± 35
Background image of page 11

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
What is missing? 1 Capital : Saving less does not raise (future) output. A good model must be dynamic . 2 Budget constraints : Taxing people reduces income. A good model must be internally consistent.
Background image of page 12
Image of page 13
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/29/2009 for the course ECON 720 at UNC.

Page1 / 38

GenEquil_SL - Modern Macroeconomics Prof. Lutz Hendricks...

This preview shows document pages 1 - 13. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online