LESSON 7
Firms in Competitive Markets
Assigned Reading
1.
Mankiw, N. Gregory, et al. 2014. Principles of Microeconomics (6th Canadian Edition). Toronto:
Nelson Education Ltd.
Chapter 14: Firms in Competitive Markets
Recommended Reading
1.
Mankiw, N. Grego
Stochastic Asset Pricing and Expected Present
Discounted Values
Jesse Perla
University of British Columbia
January 20, 2017, Draft Version: 385
1
Asset Pricing with Markov Chains
1.1
Stochastic Asset Pricing with a Discrete States
Setup:
- Assume a discr
ECON307
Problem Set 4
Page 1 of 3
Question 1: (GE with 2 goods)
A household supplies 1 unit of labor inelastically (i.e., doesnt value leisure) and consumes
two types of goods in quantities: c1 (e.g., apples) and c2 (e.g., oranges).1 The preferences
are
u
Theory of Stochastic Interest Rates
Jesse Perla
University of British Columbia
Draft Version: 435
1
Simple 2-period Stochastic model
1.1
Basic Setup
t = cfw_0, 1, states= cfw_A, B, where state realized at t = 1
Figure 1: 2-period stochastic model
Prefer
Search and the Labor Market
Jesse Perla
University of British Columbia
February 27, 2017, Draft Version: 421
1
Quick Review
1.1
Markov Chain Model of Unemployment
Recall model of unemployment:
Figure 1: Lake Model with Markov Chains
where probability of U
Theory of Interest Rates
Jesse Perla
University of British Columbia
March 18, 2016, Draft Version: 330
1
Basic Setup
1.1
Consumers preference
A consumer has preferences:
X
t u(ct ), where u0 > 0, u00 < 0, (0, 1)
(1)
t=0
These is no uncertainty.
At tim
Fiscal Policy in Growth Models
Jesse Perla
University of British Columbia
Draft Date: April 4, 2017
1
Tax and Government Policy
1.1
Basic Setup
Price System: cfw_qt , wt , rt
Tax Policy: cfw_ct , nt , kt , ht , it and government expenditure cfw_gt (e
Permanent Income with No Borrowing, and Dynamic
Programming
Jesse Perla
University of British Columbia
February 24, 2017, Draft Version: 419
1
Basic setup
Figure 1: Income and Savings over Lifecycle with Borrowing
Recall: Previous example in Figure 1 with
ECON307
Practice Problems for Final
Page 1 of 5
Question 1: (Variations on Financing Government Expenditures)
The consumer values consumption, and provides 1 unit of labor inelastically. The period
utility be u(c) = log(c).
Take our standard neoclassical
Markov Chains and Unemployment
Jesse Perla
University of British Columbia
January 20, 2017, Draft Version: 385
1
Markov Chains
A model of a stochastic process with discrete number of states.
1.1
Random Variable and Mathematical Expectation
Notation for di
The Permanent Income Hypothesis
Jesse Perla
University of British Columbia
January 25, 2016, Draft Version: 265
1
Permanent Income Model
1.1
Basic Setup
This started with Friedman in the 1950s, and was done in rational expectations with Hall in
the late 7
Stochastic Permanent Income Model and Government
Fiscal Policy
Jesse Perla
University of British Columbia
January 24, 2017, Draft Version: 392
1
Stochastic Permanent Income
1.1
Basic setup.
Linear State Space + Normal Shock:
Let
xt+1 = Axt + Ct+1
(1)
y t
Math Review
Jesse Perla
University of British Columbia
December 21, 2016, Draft Version: 373
1
Linear Algebra
1.1
Vectors
x1
x2
Vector x =
. : column vector
.
xn
h
i
Transposing the vector: xT = x0 = x1 x2 . . . xn : row vector
Notation for a vec
ECON307
Problem Set 5
Page 1 of 4
Question 1: (Transitions and Government Objective Functions)
Consider a standard setup of the neoclassical growth model in a competitive equilibrium:
A representative consumer orders its welfare by1
X
t log(ct )
t=0
wher
Linear Difference Equations and Asset Pricing
Jesse Perla
University of British Columbia
December 21, 2016, Draft Version: 373
1
Uniqueness of Solutions?
Continuing with our linear asset pricing example,
1.1
Solution:
How can we solve a difference equatio
ECON307
Problem Set 3
Page 1 of 3
Question 1: (Welfare Cost of Financial Frictions)
Let = .95, R = 1.04.
Scenario 1 for Consumer The consumer maximizes the following welfare
U=
X
t log(ct )
(1)
t=0
s.t. Ft+1 = R(Ft + yt ct ), t 0
yt = y0 t , t 0
F0 = 0
(
Introduction to Macro Theory
Jesse Perla
University of British Columbia
December 21, 2016, Draft Version: 373
1
Motivation on the Modern Macro Approach
This course will concentrate on theory rather than data (which is extremely important, but
will be cove
(Static) General Equilibrium
Jesse Perla
University of British Columbia
March 3, 2017, Draft Version: 427
1
Basic setup and Consumer Preferences
Recall notation: c u
u(c,`)
c
Commodities:
c: consumption good
`: labor
k: capital, exogenously given fo
Growth Models
Jesse Perla
University of British Columbia
Draft Date: April 3, 2017
1
Quick Review from General Equilibrium
Homogeneous Functions/CRS (Inputs x, y)
If a function F (x, y) has:
F (x, y) = F (x, y)
(1)
it is called constant returns to scale
ECON307
Midterm Practice Problems
Page 1 of 6
Question 1
(Surprise!)
A consumers optimal decision rule for consumption satisfies
X
ct = (1 ) Ft + Et
j yt+j
(1)
j=0
where ct is consumption, 1 is the gross one-period interest rate (i.e., R = 1), which is
c
ECON307
Problem Set 2
Page 1 of 3
Question 1
(Basic Unemployment Calculations)
There are two states: U for unemployment and E for employment.
With probability (0, 1), a person unemployed today becomes employed tomorrow.
With probability (0, 1), a person
ECON307
Problem Set 1
Page 1 of 3
Question 1
(Bubbles)
A dividend process follows the deterministic process:
xt+1 = A xt
(1)
where xt is an n 1 vector and A is an n n matrix, and
y t = G xt
(2)
where yt is the dividend(a scalar), and G is an n 1 vector.
(
Question I of 22 Solullon ?
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Below is the demand schedule for chicken feet, a dim sum delicacy served at some Chinese restaurants.
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In anticipation of a major hurricane hitting the Gulf Coast, the quantity gasoline ofsales rise from 360
million gallons to 3?5 million gallons.
Based on this information, What is the peroe
Question 1 of 21 Solullon l?
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Suppose ihatwar breaks out, and President Maher decides to intervene in the economy using prioe
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Question 1 of IS Sclullon i?
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Amazon has a 'L htni Deel where it slashes the price of one item. At: 3:15 PM today, they announced that the
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Question 1 of 1-1 Solution ?
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Suppose the Canadian government has decided
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