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

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
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 - then . ) 1 ( ) , ( 1 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 = 1/3, r 0 = 0.0578, = 0.0516, and
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: g = 0.015. a) Compute impulse response functions for y , c , k , and a for = 0.95 and = 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 ....
View Full Document

This note was uploaded on 01/09/2011 for the course ECON 7140 taught by Professor Kutler during the Spring '10 term at Utah Valley University.

Ask a homework question - tutors are online