Econ 416 Christiano Spring, 2009 Solutions to a Class of Linear Expectational Difference Equations
1. Introduction
These notes provide an informal characterization of the solution to a class of expectational difference equations. I first consider a very s
Christiano, Macroeconomics Fall, 2005 Financial Frictions Many economic activities require financing, because they involve the outlay of resources for a period of time, before output occurs. At the same time, the people with resources to spare and the peo
Advanced Macroeconomics Christiano Spring, 2008 Notes on the Perturbation Method
I
Introduction
These notes provide a brief introduction to the use of perturbation methods for solving the policy rule in an equilibrium model. The example used is the neocla
Christiano 416, Spring 2009 Homework 4, due Friday, May 1. 1. Consider the Rotemberg model in the handout. Set = 0. 1. Assign values to the parameters and compute the steady state of consumption, hours worked, inflation and the Ramsey multipliers. 2. Log-
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Application of Log-linearization Methods: Optimal Policy
1
Log-linear Methods
Equilibrium conditions: v (kt, kt+1, kt+2) = 0, t = 0, 1, 2, . Solution: compute steady state, k such that v (k , k , k ) = 0. ~ ~ ~ expansion about steady state: V0kt + V1kt
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Solving Dynamic General Equilibrium Models Using Log Linear Approximation
1
Log-linearization strategy
Example #1: A Simple RBC Model. Define a Model `Solution' Motivate the Need to Somehow Approximate Model Solutions Describe Basic Idea Behind Log Lin
Christiano A baby version of the BGG model of financial frictions. Economics 416 A Two-Period Version of the BGG Model
1
Introduction
This is a two-period economy with BGG financial frictions (Bernanke, Gertler and Gilchrist, 1999, The financial accelerat
Fiscal Policy in a DSGE Model: Fi l P li i DSGE M d l
The Fiscal Multiplier in `Normal times' and When the Zero Lower Bound on the Interest Rate is Binding
Based on work by: Eggertsson and Woodford, 2003, `The Zero InterestRate Bound and Optimal Monetary
Economics 411
Christiano
Sudden Stop
In the past two decades several economies have experienced a Sudden Stop:
over a brief period of time, output collapsed and the current account shifted
sharply from negative to positive. The observation that these coun
Liquidity, Business Cycles, and Monetary
Policy
Nobuhiro Kiyotaki and John Moore
First version, June 2001
This version, April 2008
Abstract
This paper presents a model of monetary economy with dierences in liquidity across assets. Our purpose is to study
Economics 416. Advanced Macroeconomics Christiano Homework #5, due May 11. A model popularized by Clarida Gali and Gertler has the following equations: Et t+1 + xt - t = 0 (Calvo pricing equation)
- [rt - Et t+1 - rrt ] + Et xt+1 - xt = 0 (intertemporal
Economics 416. Advanced Macroeconomics, Spring 2009. Christiano Homework #6, due Tuesday, May 19. 1. Consider the simple model without capital in the handout on the zero bound. Suppose government spending remains equal to its steady state value while the
Christiano 416, Spring, 2009 Homework 7, Due May 28. 1. Consider the one-sector stochastic neoclassical growth model discussed in the class and in the handout, `Notes on the Perturbation Method'. Consider the following model parameterization: (a) Compute
Christiano 416, Spring 2009 Homework 1, due Thursday, April 9. 1. Consider an economy in which household preferences have the following form:
X t=0
t u(ct , nt ), = .99, and u(ct , nt ) = log(ct ) + log(1 - nt ).
The household budget constraint is: ct +
Christiano 416, Spring 2009 Homework 2, due Friday, April 17. Consider the model economy in homework #1, in the case, = 0. 1. (a) In homework #1, you solved the model by first deriving the first order conditions for consumption and hours worked, and then
Christiano 416, Spring 2009 Homework 3, due Friday, May 1. 1. Consider the model of homework #1. Take a version in which the steady state equilibrium is indeterminate. Find a sunspot solution and simulate the response of the output, employment, investment