EPP - Macroeconomics 1
Lecture 6 - Long-run inequality: structural change
Zs
ofia L. Barany
Sciences Po
2014 October
Structural change
structural transformation: the reallocation of resources from
agriculture to manufacturing and services
I
what are the f
Graduate Macroeconomics 2
Problem set 7.
Question 1 Cyclical change in the matching model
To a very good approximation, the implications of cyclical change in the matching
model can be studied by evaluating the response of the steady state unemployment
ra
Sciences Po Graduate Macroeconomics 1
Problem set 6 solutions
Question 1
Pareto Distribution:
F (w) = 1
> 0, > 1.
w
with the following properties
F 0 (w) = w1 =
[1 F (w)]
w
1. The mean:
Z
E (w) =
wdF (w) =
Z
w
dw =
w1
1
=
.
1
The conditional mean:
Z
Graduate Macroeconomics 2
Problem set 7. - Solutions
Question 1
1. See Lecture 8 for the derivation of the equilibrium of the search and matching
model with exogenous job destruction. The equilibrium market tightness
and w jointly satisfy the job creatio
Sciences Po Graduate Macroeconomics 1
Problem set 6
Question 1
Suppose the wage distribution is Pareto
F (w) = 1
w
, > 0
Note that w and assume > 1, which ensures that there is a well-defined
mean.
1. Derive the mean of the distribution and the conditi
Sciences Po Graduate Macroeconomics 1
Problem set 5 solutions
Question 1
Since any technological improvement increases wages for both the low- and the
high-skilled workers, it necessarily increases the average wages.
Question 2
1
Y (t) = [(Al (t)L(t) + Bl
Sciences Po Graduate Macroeconomics 1
Problem set 5
Question 1
Show that in the competitive demand and supply framework seen in the lecture
any technological improvement increases average wages!
Question 2
How would you introduce technologies that directl
Sciences Po Graduate Macroeconomics 1
Problem set 4 solutions
Question 1 Scale effects
Question 6.6 from the Barro and Sala-i-Martin book.
a. From equation (6.24) in the book, the growth rate of the economy is given by
1
=
1
2
L
1
1
1
A
.
(1)
It is str
Sciences Po Graduate Macroeconomics 1
Problem set 4
Question 1 Scale effects
Question 6.6 from the Barro and Sala-i-Martin book.
a. Why does the varieties model of technological change from section 6.1 exhibit a scale effect in the sense that the growth r
Graduate Macroeconomics 1 Tutorial 2
Problem set 2. - Solutions
Question 1 the transversality condition
1. The Lagrangian of the problem is as follows:
X
L=
t ln ct (
t=0
X
ct k0 )
t=0
Notice that there is only one lifetime feasibility constraint, with m
Sciences Po Graduate Macroeconomics 1
Problem set 2
Question 1 the transversality condition
Consider the following problem:
max
cfw_ct t=0
X
t ln ct
t=0
subject to:
P
t=0 ct
k0
ct 0 for t 0
k0 is given
Use the Lagrangian method to derive the optimal con
Sciences Po Graduate Macroeconomics 1
Problem set 3 Solutions
Question 1 Social security in the Diamond model
Question 2.16 from the Romer book.
a. Pay-as-you-go social security.
i. The social security changes the life-cycle problem of the individual only
Sciences Po Graduate Macroeconomics 1
Problem set 3
Question 1 Social security in the Diamond model
Question 2.16 from the Romer book.
Consider a Diamond economy where g is zero, production is Cobb-Douglas, and
utility is logarithmic.
a. Pay-as-you-go soc
Sciences Po Graduate Macroeconomics 1
Problem set 2 additional exercise
Consider a two-period discrete time model of consumption-saving choice. In particular assume that the household lives for 2 periods (t = 0, 1), has labor income wt
in period t = 0, 1.
EPP - Macroeconomics 1
Lecture 7 - Labor markets: Introduction & the search model
Zs
ofia L. Barany
Sciences Po
2014 November
The neoclassical model of the labor market
central question for macro and labor: what determines the level of
employment and unem
Graduate Macroeconomics 1 Tutorial 1
Problem set 1. - Solutions
Question 1, 1.7 in BSM
a. The production function Y = F (K, L) = AK + BL is not neoclassical.
1. Positive and diminishing marginal products with respect to each input:
Y
=
K
Y
=
L
2Y
=0
K 2
2
Sciences Po Graduate Macroeconomics 1
Problem set 1
Question 1 The AK model
Question 1.7 in the Barro and Sala-i-Martin book
Consider the production function Y = AK + BL, where A and B are positive
constants.
a. Is this production function neoclassical? W
EPP - Macroeconomics 1
Lecture 8 - Labor markets: The search and matching model
Zs
ofia L. Barany
Sciences Po
2014 November
Last week
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an overview of some labor market facts
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a brief reminder of dynamic programming
we covered the search model
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I
I
I
I
EPP - Macroeconomics 1
Lecture 5 - Long-run inequality
Zs
ofia L. Barany
Sciences Po
2014 October
Up to now
I
studied 4 growth models
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I
I
I
I
Solow
NGM
OLG
endogenous growth varieties model
models that replicate the Kaldor facts
1.
2.
3.
4.
5.
the growt
EPP - Macroeconomics 1
Lecture 1 - Growth facts & the Solow model
Zs
ofia L. Barany
Sciences Po
2014 September
About the course I.
I
I
2-hour lecture for 12 weeks, Mondays from 10:15-12:15
3 big topics covered:
1. economic growth
2. long-run inequality
3.
EPP - Macroeconomics 1
Alwyn Young: The Tyranny of Numbers
Zs
ofia L. Barany
Sciences Po
2014 September
Motivation/research question
from 1966 to 1990 real income per person
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grew at 2% per year in the US
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grew more than 7% per year in the East Asian Ti