Macroeconomic Theory
Dirk Krueger1
Department of Economics
University of Pennsylvania
September 16, 2010
1
I am grateful to my teachers in Minnesota, V.V Chari, Timothy Kehoe and Edward Prescott, my ex-colleagues at Stanford, Robert Hall, Beatrix Paal and
Question 4, Final Exam, Fall 2007
The Comovement Puzzle
Gui Woolston
September 12, 2007
You had about 27 minutes to solve this question. This question was relatively straight-forward. You needed to take FOCs, do a bit of algebra, and
know the importance o
1
Introduction to Graduate Education
601
Hall Seven
Understanding critical thinking from a Christian
Worldview
2
Week Seven Topics
Defining critical thinking
Importance of critical thinking
Perspectives
Assumptions and biases
Sound reasoning
Deductive ver
Econ 211; Slides 8
Martin Schneider
Winter 2010
Martin Schneider ()
Econ 211; Slides 8
Winter 2010
1 / 11
Unemployment volatility puzzle: escape routes?
neutrality result depends on special assumptions
(preferences, recruiting costs in terms of labor)
mod
Econ 211; Slides 7
Martin Schneider
Winter 2010
Martin Schneider ()
Econ 211; Slides 7
Winter 2010
1 / 26
Road map
Characterizing search equilibrium
Labor market facts
Calibrating the search model
Integrating search into a full business cycle model
Martin
Econ 211; Slides 6
Martin Schneider
Winter 2010
Martin Schneider ()
Econ 211; Slides 6
Winter 2010
1 / 19
Search frictions in the labor market
1
Job search
unemployed worker samples wages from given distribution
2
Search & matching in equilibrium
rms & un
Econ 211; Slides 5
Martin Schneider
Winter 2010
Martin Schneider ()
Econ 211; Slides 5
Winter 2010
1 / 26
Comparison of empirical methods
Substantive question: what is the eect of technology shocks on
hours worked?
Use RBC model & two empirical methods to
Econ 211; Slides 4
Martin Schneider
Winter 2010
Martin Schneider ()
Econ 211; Slides 4
Winter 2010
1 / 16
Intertemporal elasticity of substitution
Micro studies produce very imprecise estimates, IES around .5, higher
(>1) for richer people.
Coe cient of r
Econ 211; Slides 3
Martin Schneider
Winter 2010
Martin Schneider ()
Econ 211; Slides 3
Winter 2010
1 / 28
RBC equilibrium as a linear time series model
Have seen capital is AR(2)
(1
kk L)(1
L)kt = kz ut
Consumption
ct
= ck kt
+ cz zt
Lkz ut
ut
= ck
+ cz
(
Econ 211
Martin Schneider
Winter 2010
Martin Schneider ()
Econ 211
Winter 2010
1 / 41
Raw GDP data from National Income & Product Accounts
quarterly GDP, $ trillions, 1947-2004
3
2.5
2
1.5
1
0.5
1950
Martin Schneider ()
1960
1970
Econ 211
1980
1990
2000
W
Problem Set 2
due Wednesday March 10
Martin Schneider
Econ 211 Winter 2010
RBC model via dynare, and eects of habit formation
For this problem set, youre asked to compute the version of the RBC model
introduced in the second batch of slides using dynare,
Problem Set 1
due Monday March 1
Martin Schneider
Econ 211 Winter 2010
Computing the RBC model via loglinearization
For this problem set, youre asked to loglinearize and compute the version of
the RBC model introduced in the second batch of slides.
Notati
Final Exam
Martin Schneider
Econ 211 Winter 2010
1. Consider a simplied version of the RBC model. We assume
labor is supplied inelastically, = 1 always
preferences over consumption are given by log utility
"
#
X
log
0
=0
capital fully depreciates eve
Syllabus for Econ 211, part 2; Winter 2010
Instructor Martin Schneider, schneidr@stanford.edu
TA: Johannes Stroebel, stroebel@stanford.edu
This module of the core macro sequence introduces business cycle facts &
models used to explain them.
Course outline
Core Economics - Module 11
MW 10:00-11:50am, Room 140
Econ 211, Winter 2010
Oce hours: M 1:15-3:15pm
Professor Mich`le Tertilt
e
tertilt@stanford.edu
Landau 332
ph 724-4903
Macroeconomics II (rst half )
This course is the second in a three-course sequence
Introduction to Growth Theory
Econ 211
Winter 2010
Professor Mich` le Tertilt
e
Plan:
Introduction into economic growth
basic growth facts
growth models
neoclassical growth model
AK model
endogenous growth models with imperfect competition.
macro d
Economics 211, Winter 2009
Problem Set #2 Solutions
Instructor: Mich`le Tertilt
e
TA: Johannes Stroebel
February 1, 2010
Question 1: Calibration
See lecture slides.
Question 2: AK Model
The population at time t is L(t) = ent . Note that in order to be con
Macroeconomic Theory
Professor Mich`le Tertilt
e
tertilt@stanford.edu
Econ 211, Winter 2010
Problem Set # 2
Due: February 1, 2010 in class.
Question 1 (Calibration):
Consider an economy in which the equilibrium solves the optimal growth problem
max
t ln(
Macroeconomic Theory
Professor Mich`le Tertilt
e
tertilt@stanford.edu
Econ 211, Winter 2010
Problem Set # 1
Due: January 20 in class.
Question 1 (Notation)
Consider an overlapping generations economy in which the representative consumer in generation t, t
Human Capital and Growth
Pete Klenow
Econ 210, Stanford University
Fall 2010
Key Points
NGM plus Human Capital:
AK model tractable and popular, but a stand-in for K and H .
H is the natural "2nd capital stock" given 1 goes to labor.
Lucas: H is produce
Exam for Econ 210 Core Macro
Monika Piazzesi
Stanford University
November 30, 2010
1. [50 points] Consider the following discrete-time growth model with full
depreciation
X
max
2
cfw_
2
=0
=0
subject to
+1 = 0 given
Assume that 0 and 1 so that the utili
Economics 211, Winter 2010
Problem Set #1 Solutions
Instructor: Michele Tertilt
TA: Johannes Stroebel
January 25, 2010
Question 1: Notation
1. (See Krueger Book, Def. 82) Using money as numeraire, an Arrow-Debreu equilibrium consists of
an allocation (0 ,
1
Problem 2 (Romer endogenous growth model with a res
source cost of invention)
2. In this part we wanted to show that the optimal choices of capital good (intermediate goods)
are the same for all varieties of goods. This can be seen by adjusting the prod
Macroeconomic Theory II
Professor Mich`le Tertilt
e
tertilt@stanford.edu
Econ 211, Winter 2010
Final Exam Answer Key
Wednesday, February 3, 2009, 10:00 11:50am
Question 1 (Overlapping Generations Models) [50 points]
Consider an overlapping generations eco
Macroeconomic Theory II
Professor Mich`le Tertilt
e
tertilt@stanford.edu
Econ 211, Winter 2008/09
Final Exam
Monday, February 9, 2009, 1:15 3:05pm
Instructions:
1. You have 100 minutes to answer this exam.
2. This exam has 2 questions. Note that the total
Macro Comprehensive Exam Spring 2009
Professor Mich`le Tertilt
e
Consider an overlapping generations economy in which the representative consumer
born in period t, t = 1, 2, . . . , has preferences over consumption of the single good in
periods t and t +
EXAM 210 A
The exam has two parts. The first part has two questions each worth 30 points.
You are required to answer both of them. The second part has three question. You
have to chose two out of the three (each worth 20 points). Do not answer all three
q
Question 6, Final Exam, Fall 2006
Investment in Human Capital
Gui Woolston
November 13, 2007
This is a great question. It asks you to review much of the material from
throughout the class. There is quite a bit of technical DP work, and it showcases
some o
Exam for Econ 210 Core Macro
Monika Piazzesi
Stanford University
Friday, October 22, 2010
1. [50 points] Consider the following discrete-time growth model with full
depreciation
X
max
2
cfw_
2
=0
=0
subject to
+1 = 0 given
Assume that 0 and 1 so that th