Professor Salyer, Economics 137, Spring 2014
Economics 137
Macroeconomic Policy
Course Description: This course will study the theory of macroeconomic policy. First we will examine some
issues in the conduct of fiscal policy and then turn our attention to
Professor Salyer, Economics 137, Spring 2005
Homework #4, May 5
1. In discussing the history of post-WWII scal policy, Christina Romer discusses two features that have yielded an actual government budget surplus that
is decidedly procyclical in the postwa
Kevin D. Salyer, Economics 137, Winter 2007
1
Homework #4 - Due March 8 (in Section)
1. Consider the following IS-LM model:
Y = a0 + a1 r + u
M = b 0 + b1 Y + b 2 r + v
where u; v denote random shocks to the goods and money market respectively.
Express th
K EVIN S ALYER , ECN 137, W INTER 09 - H OMEWORK #4
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The Lucas Critique and the Lucas Supply Curve Due 03/03 (in section)
1. In his critique of economic policy analyis, Lucas derived the following demand
curve for capital (i.e. investment) in a hypotheti
K EVIN S ALYER , ECN 137, FALL 2007 - H OMEWORK #4
1
Lucas Imperfect Information Model - Due 11/14 (in
class)
1. The following exercise gives you some practice in working with the Lucas model;
also, it should help to develop a little intuition. Recall tha
K. S ALYER , ECN 137, FALL 2007
1
Answers to Homework #4
1. Since the money supply process follows
mt D mt
C c C ut
N
1
(1)
this implies that the expectations of m t at time t (with u t unobservable) is (letting It
denote information at time t):
E .m t jI
K. S ALYER , ECN 137, W INTER 2009
1
Answers to Homework #4
1. The left-hand side (LHS) of the equation is the optimal desired capital stock of
the rm.
(a) The rst term on the right-hand side (RHS) re ects the state of future demand. Higher demand leads t
Solutions to Homework #5
1)
Ecn 137, Winter 2007
Y = a 0 +a1r + u
M = b0 +b1Y + b2 r + v
(1)
(2)
M is the policy instrument in this problem, so that means Y and r are the endogenous variables
we need to solve for.
Plug equation (1) into equation (2)
M = b
Kevin D. Salyer, Economics 137, Spring 2005
1
Homework #5 - Due June 2 (in Section)
1. Consider the following IS-LM model:
Y = a0 + a1 r + u
M = b0 + b1 Y + b2 r + v
where u, v denote random shocks to the goods and money market respectively.
Express the m
Kevin D. Salyer, Economics 137, Fall 2007
1
Homework #5 - Due Dec. 7 (in class)
1. Consider the following IS-LM model:
Y = a0 + a1 r + u
M = b0 + b1 Y + b2 r + v
where u; v denote random shocks to the goods and money market respectively. Express the model
Kevin D. Salyer, Economics 137, Winter 2009
1
Homework #5 - Due 03/12 (in class)
1. Consider the following IS-LM model:
Y = a0 + a1 r + u
M = b0 + b1 Y + b2 r + v
where u; v denote random shocks to the goods and money market respectively. Express the mode
Kevin D. Salyer, Economics 137, Winter 2009
1
Homework #5 - Answer Key
1. Consider the following IS-LM model:
Y = a0 + a1 r + u
M = b0 + b1 Y + b2 r + v
where u; v denote random shocks to the goods and money market respectively. Express the model in reduc
Kevin Salyer, Economics 137, Spring 2004
Answers to Homework #1
1. For the US, historical data on the debt can be found at the Oce of Management and Budget (OMB) which is a division of the executive branch. Its web
site has all sorts of interesting data,
Professor Kevin Salyer, ECN 137, Winter 2007
HOMEWORK #1, DUE 1/25 (IN SECTION)
1. Supply the following facts (you can use either GDP or GNP for these).
Provide your sources.
a. What was the ratio of nominal outstanding public debt to GDP for the
US in 19
Professor Salyer, Economics 137, Spring 2003
Homework #4 Due Thursday, June 5
This homework consists of a single task: Write an outline of the
topics covered in class. Add comments that describe how the
topics relate to each other. Within each topic, outl
Professor Salyer, Economics 137, Fall 2007
Homework #3, Due October 26 in Section
.
1. A two-period Ramsey problem: Consider an economy that lasts for two periods.
Households in this economy have income in the rst period of life denoted Y0 ;
they have no
Professor Salyer, Economics 137, Spring 2004
Homework #2, Due April 29
1. A 3-period maximization problem
Jerry lives for three periods and has utility given by:
ln c0 + ln c1 + 2 ln c2
Income in each period of life is:
Y0 = 1, Y1 = 1.1, Y2 = (1.1)2
Each
Professor Kevin Salyer, ECN 137, Spring 2005
HOMEWORK #1, DUE 4/14 (IN SECTION)
1. Supply the following facts (you can use either GDP or GNP for these).
Provide your sources.
a. What was the ratio of nominal outstanding public debt to GDP for the
US in 19
Salyer, ECN 137
1
Homework #1, Answer Key
1. For parts (a) and (b), see the tables from the Economic Report of the
President. For parts (c) and (d), I use data from the OECD. See the tables
listed on the next page.
1
TABLE B79.Federal receipts, outlays, s
Professor Kevin Salyer, ECN 137, Fall 2007
HOMEWORK #2, DUE 10/15 (IN SECTION)
1. Go to the Congressional Budget O ce web page and nd the link for
Historical Budget Data.You can download this as either a PDF le or a
spreadsheet (Excel). I highly recommend
Salyer, ECN 137, Spring 2005
1
Homework #2, Answer Key
1. For parts (a) and (b), see the tables from the Economic Report of the
President. For parts (c) and (d), I use data from the OECD. See the tables
listed on the next page.
1
TABLE B79.Federal receipt
Professor Kevin Salyer, ECN 137, Winter 2009
HOMEWORK #2, DUE 01/20 (IN SECTION)
1. Go to the Congressional Budget Office web page and find the link for Historical Budget Data.You
can download this as either a PDF file or a spreadsheet (Excel). I highly r
Kevin D. Salyer, Economics 137, Spring 2003
1
Homework #3 - Due May 29
1. Consider the following IS-LM model:
Y = a0 + a1 r + u
M = b0 + b1 Y + b2 r + v
where u, v denote random shocks to the goods and money market respectively.
Express the model in reduc
Solutions to Homework #3
1)
Ecn 137, Spring 2003
Y = a 0 +a1r + u
M = b0 +b1Y + b2 r + v
(1)
(2)
M is the policy instrument in this problem, so that means Y and r are the endogenous
variables we need to solve for.
Plug equation (1) into equation (2)
M = b
Kevin D. Salyer, Economics 137, Spring 2004
1
Homework #3 - Due May 27 (in Section)
1. Consider the following IS-LM model:
Y = a0 + a1 r + u
M = b0 + b1 Y + b2 r + v
where u, v denote random shocks to the goods and money market respectively.
Express the m
Professor Salyer, Economics 137, Winter 2009
Homework #3, Due 02/03 in Section
.
1. A two-period Ramsey problem: Consider an economy that lasts for two periods. Households in
this economy have income in the first period of life denoted Y 0 ; they have no
Solutions to Homework #3 1) Y = a 0 +a1r + u M = b0 +b1Y + b2 r + v
Ecn 137, Spring 2004 (1) (2)
M is the policy instrument in this problem, so that means Y and r are the endogenous variables we need to solve for. Plug equation (1) into equation (2) M = b