8/28/2016
Econ 501, Fall 2016
RATIKA NARAG, PhD
Stylized Facts of Economic
Growth
Output (real GDP) per worker y = Y/L and capital
per worker k = K/L grow over time at relatively
constant and positive rate
They grow at similar rates, so that the ratio
bet
19581
T he Relation Between Unemployment a nd the R ate
of Change of Money Wage Rates in t he
United Kingdom, 1861-1957
By A. W. PHILLIPS
I. HYPOTHESIS
When the demand for a commodity o r service is high relatively t o
the supply of it we expect the price
ECON 501: MACROECONOMIC ANALYSIS AND POLICY
MARK MOORE
SPRING 2013
LECTURE NOTES: NOTES ON INTERTEMPORAL OPTIMIZATION
These notes do not constitute anything close to a full treatment of this topic. The
objective is to build up a framework that will genera
ECON 501: MACROECONOMIC ANALYSIS AND POLICY
MARK MOORE
SPRING 2013
LECTURE NOTES: NEW KEYNESIAN AND DSGE MODELS
I. The Benchmark New Keynesian Approach to Fluctuations
My treatment is a selected version of Olivier Blanchard, course materials for 14.452
Ma
HOMEWORK2
Econ501:MacroeconomicAnalysisandPolicy
Fall2016
1.
a) TheEulerequationis
1
1
b) k A
*
Akt11
ct 1
1
ct
, y Ak AA
*
1
,
1
c* y * k * AA1 A1
1
A 1
y* c*
c) Thesteadystatesavingsrate s
*
y
A A 1
*
c
d) When=1,theEulerequationbecomes t 1 A
ct
9/26/2016
Econ 501, Fall 2016
RATIKA NARAG, PhD
All Rights Reserved
Introduction
Besides the neoclassical growth model, the OLG
model is the second major workhorse of modern
macroeconomics
Pioneered by Allais (1947), Samuelson (1958),
and Diamond (1965)
10/17/2016
Econ 501, Fall 2016
RATIKA NARAG, PhD
All Rights Reserved
Introduction
One drawback of the Solow model is that longrun growth in per capita income is entirely
exogenous
In the absence of exogenous technological
growth, income per capita would
10/25/2016
Econ 501, Fall 2016
RATIKA NARAG, PhD
All Rights Reserved
Stylized Facts
Plot total consumption expenditure as a fraction of
either GDP or personal income for the US
between 1946 and 2000
Between 60% and 70% of GDP is used for private
consumpt
HOMEWORK 0
Econ 501: Macroeconomic Analysis and Policy
Ratika Narag, PhD
Fall 2016
1. Determine the concavity/convexity of f (x ) = x 2 + 8 x 3
1
3
2. Let f (x ) = Ax , where A > 0 and are parameters. For what values of is
f (which is twice differentiable
Econ 501, Fall 2016
1
TA Handout #2
September 24, 2016
Neoclassical Growth
1.1
Model Setup
1. Technology: The final output good is produced using labor and capital services as inputs.
yt = F (kt , nt )
Output can be consumed or invested.
yt = it + ct
Inve
HOMEWORK1:Solutions
Econ501:MacroeconomicAnalysisandPolicy
Fall2016
1.
a) Firstweshowthatitishomogeneousofdegree1:
AcK cL
1
Ac K c1 L1 cAK L1
Nextshowthatbothfactorsarenecessary:
A0L
1
0
AK 0 0
Bothfactorscontributetooutput:
F
AK 1L1
K
F
A1 K L
L
Si
HOMEWORK 1
Econ 501: Macroeconomic Analysis and Policy
Fall 2016
1. Suppose that the world is described by the Solow model and the
production function is
F (K , L ) = AK L1
where 0<1. This is the Cobb-Douglas function we discussed in class.
a) Show that t
GNI Per Capita, PPP, 2010
Source: World Bank
38 Missing Observations
Top 25 Countries
Qatar
Luxembourg
Norway
Macao SAR
Singapore
Kuwait
Switzerland
United States
Hong Kong SAR
United Arab Emirates
Netherlands
Denmark
Sweden
Austria
Canada
Belgium
Germany
GNI Per Capita, PPP, 2007
Source: World Bank
Top 25 Countries
Luxembourg
Norway
Kuwait
Macao SAR, China
Brunei Darussalam
Singapore
United States
Hong Kong SAR, China
Switzerland
Netherlands, The
Sweden
Ireland
Canada
Denmark
Austria
United Kingdom
Finlan
c omments and discussion
283
that Chairman Bernanke had repeatedly said that the Federal Reserve was
engaging in credit easing, not quantitative easing. Mishkin thought a key
conclusion of the paper was that actions in credit markets, and signaling
in par
282
Brookings Papers on Economic Activity, Fall 2011
issuances was also an issue during Operation Twist in the 1960s, when the
Federal Reserve supposedly was coordinating with the Treasury. The current Treasury was emphatic that it was not linking its act
c omments and discussion
281
points, Elliott doubted that the large difference could be fully attributed to
the default risk channel, as the authors suggested.
Finally, Elliott agreed with Thomas Philippon that markets do not see
agency bonds as having th
280
Brookings Papers on Economic Activity, Fall 2011
are highlighted. It is clear that QE1 took place at a time of extremely high
and volatile yields, probably reflecting acute concerns about consumer
credit risk. If the main effect of QE is to save the e
279
c omments and discussion
Figure 2. Yields on consumer credit ABss, January 2007september 2011
Percent per year
9
8
7
6
5
4
3
2
1
QE1
2007
2008
QE2
2009
2010
2011
Source: Barclays (via Datastream).
is typical of views in the industry, it does not seem
c omments and discussion
277
The yield curve slopes upward if long-term bonds are riskier than shortterm bonds. This depends on the covariance between m and the future
short-term rate. Bad news corresponds to high values of m. If the Federal
Reserve incre
