prelsp04 - Macroeconomics 702, Spring 2004, Qualifying...

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Unformatted text preview: Macroeconomics 702, Spring 2004, Qualifying Exam: Jos´ e-V´ ıctor R´ ıos-Rull May 12, 2004 In the following there are 19 questions for 120 points. Please answer questions that are worth 100 points. Only the first 100 points worth of possible answers count. Be as BRIEF as you can and good luck. You have 120 minutes. Growth Models There is an economy with many identical consumers and infinite time. Consumers have preferences E ∞ X t =0 β t " [ φ ( c A,t , c B,t )] 1- σ 1- σ + α (1- n t ) # where φ ( ., . ) is some function increasing in its two arguments c A,t is the consumption of apples at time t , C B,t is the consumption of bananas at time t and n t is the fraction of time worked at time t . Apples can become capital the next period, while apples do not. The technology to produce both types of fruit is given respectively by z i t F i ( K it , N it ) , i ∈ { A, B } and where K it , N it , are capital and labor. Shocks to productivity z i have finite support, are independent of each other and follow a Markov chain with transition matrices Γ i . Capital can be costlessly allocated between technologies and depreciates at rate δ . 1. (10 points) Define an Arrow-Debreu competitive equilibrium. Carefully define the com- modity space, and the consumption and production possibility sets. 2. (5 points) State the two welfare theorems....
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This note was uploaded on 11/12/2010 for the course ECON 8108 taught by Professor Staff during the Spring '08 term at Minnesota.

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prelsp04 - Macroeconomics 702, Spring 2004, Qualifying...

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