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Unformatted text preview: Introduction to MATLAB for Economists Seth Neumuller September 12, 2011 Module III: An Application This set of modules is designed to introduce the first year graduate student in eco nomics to programming in MATLAB. While no prior programming experience is required, familiarity with matrix algebra, basic statistics, and completion of Modules 1 and 2 will be helpful in completing the following assignment. Assignment 3 During World War II the Japanese economy suffered a significant amount of capital destruction. Over the next 40 years or so the Japanese economy rebounded and grew at an exceptional rate. In an attempt to explain this ‘growth miracle,’ Chen et al. (2006) simulate the Japanese economy from 1956 through 2000 using a calibrated, perfectforesight, one sector neoclassical growth model. 1 In this assignment you will replicate Figure 2 in the paper referenced above. A stationary equilibrium for the model economy considered by Chen et al. is given by sequences of output { Y t } T t =1 , consumption { C t } T t =1 , capital { K t } T +1 t =1 , and labor { L t } T t =1 such that, given an initial capital level of capital K 1 , a sequence of capital depreciation rates { δ t } T t =1 , a sequence of capital income tax rates { τ t } T t =1 , a sequence of total factor pro ductivity (TFP) growth rates { γ t } T t =1 , a sequence of government expenditures as a fraction of output { g t } T t =1 and a sequence of population growth rates { η t } T t =1 , the following system of equations is satisfied at every date t ∈ [1 ,T ] : Y t = K θ t L 1 θ t (1) 1 Translation: (1) a calibrated model is one in which the parameters have been selected such that the output of the model matches some aspect(s) of the actual data, (2) a perfectforesight economy is one in which agents have perfect knowledge of future variations in exogenous variables, and therefore face no uncertainty, and (3) a one sector neoclassical growth model is composed of a representative agent who...
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 Fall '10
 riley
 Economics, representative, Yt, japanese economy

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