compstat

compstat - Comparative Statics: Comparative Neoclassical...

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Comparative Statics: Comparative Statics: Neoclassical Model Neoclassical Model Graduate Macroeconomics I ECON 309 – Cunningham
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2 Method of Comparative Statics Method of Comparative Statics Given, an economic system of the form: . Such a system can be interpreted as the set of certain equilibrium relations or the set of certain optimization conditions. If equilibrium, then and are the excess demands for and prices of the i th commodity. To consider “shifts” of the system due to changes in exogenous variables, rewrite the system making the exogenous variables explicit: n i x x x f n i ,..., 3 , 2 , 1 , 0 ) ,..., , ( 2 1 = = i f i x ,...). , ; ,..., , ( 2 1 β α n i x x x f
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3 Comparative Statics Comparative Statics , continued , continued Assume all second partials exist and are continuous. Then are the “shift parameters” or exogenous variables. If the f i are well-behaved, then we can write Comparative statics is concerned with the effect of a change in one or more of the shift parameters on the
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compstat - Comparative Statics: Comparative Neoclassical...

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