Ec 502: notes on long-run growth
Part 1
Ali Ozdagli
1
Introduction: Facts and Questions
Once you start thinking about economic growth, it is hard to think about anything else.
- Robert Lucas, Jr, Nobel Laureate 1995
We want to study the evolution of incom
Econ 502, Fall 2014
Ali Ozdagli
Homework 2
Due to class on Thursday, Oct 2
Cross-country variation in income per capita and convergence: Empirics
This problem requires you to analyze real data using econometric tools. I recommend using Stata,1
but you can
Ec 502: Money with Flexible Prices
Ali Ozdagli
1
Motivation and Introduction
Macroeconomists are interested in understanding in
ation (the overall rise in the price of the
consumer basket, as measured by the consumer price index CPI).1 In
ation distorts e
Ec 502: General Equilibrium the Real Business Cycle Model
Ali Ozdagli
1
Introduction
Previously we studied the decisions of household to consume vs. save, given their nancial wealth, the
income they have today and expect to receive in the future, and the
Ec 502: Notes on Investment
Ali Ozdagli
1
Introduction and motivation
Investment refers to the accumulation of factors of production. In the national income and product
accounts (NIPA), physical investment is the construction both of residential and nonre
Ec 502: Notes on Consumption and Savings
Ali Ozdagli
1
Motivation
These notes focus on an important economic choice: how much to consume vs. save.
When we analyzed the Solow model, we assumed that people saved a constant share s of their
income.
But, this
EC 502
MRG(1992) argue that we get the data of human capital stock (h) easier
than human captal savings rate (sh ). We need to convert from equation of (11)
to (12) of MRG. Following is the procedure how to get equation (12) from (10)
and (11) of MRG.
k =
Econ 502, Fall 2014, due Dec 4
Homework 6
Problem 1: Simple General Equilibrium Model: a shock to demand
Consider the two period model we solved in class, with xed labor supply and government spending,
C1 + G1 + K2 = (1
) K1 + Y1 ;
C2 + G2 = (1
) K2 + Y2
Econ 502, Fall 2014
Ali Ozdagli
Homework 5
Investment
Consider a rm that chooses capital to maximize the expected present discounted value of pro ts:
!
1
s
X
1
K
Vt = Et
( t+s ; Kt+s ) Pt+s It+s C(It+s ) ;
1+r
s=0
subject to
Kt+1 = (1
)Kt + It
K
Pt+s
wher
Econ 502, Fall 2014
Ali Ozdagli
Homework 4
Due Thursday, Oct 16
Part I. Consumption Smoothing: Empirical Tests
Like Homework 2, this problem requires you to analyze real data using econometric tools. Again you
can use Stata, or any other software that you
Econ 502, Fall 2014
Ali Ozdagli
Homework 3
Problem 1: Distribution of Income Dynamics in the Solow Model
Consider the Solow model, with the following modi cation. There are two types of people, workers
and capitalists. There are Lt workers, with Lt = L0 (
Econ 502, Fall 2014
Ali Ozdagli
Homework 1
Due to Sep 18, 2014, 5pm; Danielle's mailbox
Problem 0: Factors that a ect level versus growth rate of per capita variables (output
per capita, capital per capita, consumption per capita)
Remember that, in the So