MACROECONOMIC THEORY
ECON 8105
PROBLEM SET #1
T. J. KEHOE
FALL 2012
1. Consider an economy two infinitely lived consumers, each of whom has the same
utility function,
i
i
u(c0 , c1 ,.) t 0 t log cti ,
where 0 1. Suppose that consumer 1 has the endowments
MACROECONOMIC THEORY
ECON 8105
PROBLEM SET #3
T. J. KEHOE
FALL 2012
1. Consider an overlapping generations economy in which there is one good in each
period and each generation, except the initial one, lives for two periods. The
representative consumer in
MACROECONOMIC THEORY
ECON 8105
PROBLEM SET #5
T. J. KEHOE
FALL 2012
1. Consider an economy like that in question 3 on problem set #4 in which the
equilibrium allocation is the solution to the optimal growth problem
max E t 0 t log Ct (1 ) log( N t h Lt )
MACROECONOMIC THEORY
ECON 8105
PROBLEM SET #2
T. J. KEHOE
FALL 2012
1. Consider an overlapping generations economy in which the representative consumer
in generation t , t 1, 2,. , has preferences over the consumption of the single good in
each of the two
Excel Tips for Growth Accounting
This document discusses the Microsoft Excel commands used during the growth
accounting demonstration presented in class.
Before manipulating the data, it is a good idea to organize the worksheet you will
be working with in
MACROECONOMIC THEORY
ECON 8105
ANSWERS TO MIDTERM EXAMINATION
T. J. KEHOE
FALL 2012
1. (a) With an Arrow-Debreu markets structure futures markets for goods are open in
period 0 . Consumers trade futures contracts among themselves.
An Arrow-Debreu equili
Notes on McCalls Model of Job Search
Timothy J. Kehoe
March 2011
F (v) prob( w v) , w [0, B ] .
Choice: accept wage offer w or receive b and search again next period.
An unemployed worker solves
max E t 0 t yt
where
w if job offer has been accepted
yt
.
MACROECONOMIC THEORY
ECON 8105
FINAL EXAMINATION
T. J. KEHOE
FALL 2012
Answer two of the following four questions.
1. Consider an overlapping generations economy in which the representative consumer born in
period t , t 1, 2, , has the utility function ov
Answers to Problem Set 11
Collaborative Learning Session
E201 Fall 2012
1.
Suppose you and your roommate have started a bagel delivery service on campus. List
some of your fixed costs and describe why they are fixed. List some of your variable
costs and d
EQUILIBRIUM AND PARETO EFFICIENCY
Environment:
Pure exchange economy with two infinitely lived consumers and one good per period.
Utility:
t =0
it log cti where 0 < i < 1 , i = 1, 2 .
i
i
Endowments: ( w0 , w1i , w2 ,.) where wti > 0 , i = 1, 2 , t = 0,1
MACROECONOMIC THEORY
ECON 8105
T. J. KEHOE
FALL 2012
SYLLABUS
Readings:
The reference books for this course are
L. Ljungqvist and T. J. Sargent, Recursive Macroeconomic Theory. Second edition. The MIT
Press, 2004.
N. L. Stokey and R. E. Lucas with E. C. P
MACROECONOMIC THEORY
ECON 8105
MIDTERM EXAMINATION
T. J. KEHOE
FALL 2012
Answer two of the following three questions.
1. Consider an economy with two infinitely lived consumers. There is one good in each period.
Consumer i , i 1, 2 , has the utility funct
Balanced Growth
Kaldor's stylized facts
1. Yt / N t (output per working age person) exhibits continual growth.
2. K t / N t (capital per working age person) exhibits continual growth.
3. rt (real interest rate) is roughly constant.
4. K t / Yt (capital-ou
Structural Reforms for Sustainable Growth
Timothy J. Kehoe
University of Minnesota
and Federal Reserve Bank of Minneapolis
Challenges and Opportunities for the Global Economy
September 2012
www.econ.umn.edu/~tkehoe
Based on
Timothy J. Kehoe and Felipe Me
General Equilibrium with Time and Uncertainty
1. Pure exchange, m consumers, one good per state
a) Primitive concepts
Events t 1,., n (finite number)
Stationary Markov chain ij prob(t j | t 1 i )
An event history, or state, is a node on the event tree s (
MACROECONOMIC THEORY
ECON 8105
PROBLEM SET #4
T. J. KEHOE
FALL 2012
Questions 1, 2, and 3 require you to find annual time series data on constant price GDP,
current price GDP, current price investment, hours worked, and working age population
for the some