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homework3 2010

# homework3 2010 - g = 0.015 a Compute impulse response...

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ECN/APEC 7240 Spring 2010 Homework 3 Due 2/10/10 1) We have shown that the Consumption RBC Model with δ = 1, u ( C ) = ln C , and F ( K , L ) = K α L 1 - α then . ) 1 ( ) , ( 1 α α αβ - - = A K A K C Show that our log-linear approximation to the consumption function is exact in this case. (Hint: It is easier to show that the elasticities satisfy the log-linearized equations of motion than to show that our solution for the elasticities corresponds to what you get from C ( K , A ).) 2) Let us consider the Consumption RBC Model with Cobb-Douglas production and CRRA utility. We calibrate the model with α = 1/3, r 0 = 0.0578,
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Unformatted text preview: g = 0.015. a) Compute impulse response functions for y , c , k , and a for ρ = 0.95 and θ = 0.5, 1.0, 2.0, 5.0, and 10.0. Plot the impulse response function for each variable all on the same graph for the different , so there will be four graphs (one for y , one for c , one for k , and one for a ). Discuss the dependence of each graph on . b) Compute impulse response functions for y , c , k , and a for = 1 and = 0, 0.25, 0.5, 0.75, 0.9, and 0.95. Discuss the dependence of each graph on ....
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