Problem Set 3
Due on April 28th
April 21, 2014
Question 1: Intertemporal Consumption Choice1: Identical Agents
Consider the two-period intertemporal consumption decision model that we discussed in class,
where the households utility function is given by:
Econ 202 - Section 05
Spring 2014
Problem Set 3 Proposed Solutions
Nuno Sousa
April 26, 2014
Question 1
1)
Let bt represent bond holdings at the end of period t. The household is born with no endowment or
debt, so b0 = 0. It also does not leave any debt a
Problem Set 6
(due on June 4th)
Econ 202 - Spring 2014
May 19, 2014
Question 1: Cash-in-Advance: Extension
In this question we consider a variant of the cash-in-advance (CIA) model that we discussed
in class. Suppose an economy is made up of one represent
Pset 5
(due on may 28th before class )
Econ 202 - Spring 2014
May 19, 2014
Question 1: Business Cycle
Suppose that a representative individuals period-t utility function is:
u(ct , ht ) = ln(ct ) + b
ht ) 1
(1
1
1) Suppose that the representative individu
Pset 4
May 9, 2014
Question 1: AK model
Suppose to have a Solow model with CRTS on capital. Then, the production function is going
to look like:
Yt = AKt
Population is equal to Nt . The low of motion of capital will be:
Kt+1 = sf (Kt )
Kt
a) Write all the
Problem Set 2
Econ 202 - Elisa Giannone
(Due on April 16th, 2014)
April 9, 2014
Question 1
In an economy, with one time period, there are N identical households and M identical rms.
Each rm demands capital, kd , and labor, ld , to produce a consumption go
Econ 202 - Section 05
Spring 2014
Problem Set 5 Proposed Solutions
Nuno Sousa
June 4, 2014
Question 1: Business Cycle
1)
Let us write the maximization problem for the agent that lives in just one period
max log(wh) + b
h
(1 h )1
1
The FOC,
[h] :
1
= b (1
Econ 202 - Section 05
Spring 2014
Problem Set 6 Proposed Solutions
Nuno Sousa
June 6, 2014
Question 1: Cash-in-Advance: Extension
1)
The CIA constraint holds with equality,
pt c1t = mt1
the reason is that if the agent holds more cash than necessary to con
Econ 202 - Section 05
Spring 2014
Problem Set 4 Proposed Solutions
Nuno Sousa
May 20, 2014
Question 1
a)
Variables in per capita terms, assuming population grows at rate n.
kt
Kt
Nt
yt = Ak t
(1 + n ) k t +1 = s f ( k t ) + (1 ) k t
b)
From the law of mo
Econ 202 - Section 05
Spring 2014
Problem Set 1 Solutions
Nuno Sousa
April 18, 2014
Question 1: Nominal GDP vs. Real GDP
1)
In this economy, nominal GDP at time t is given by:
G
L
Nominal GDPt = PtG Qt + PtL Qt
2)
Real GDP at time t using 2010 as the base
Econ 202 - Section 05
Spring 2014
Problem Set 2 Solutions
Nuno Sousa
April 11, 2014
Question 1
1)
Firms maximize prots: total revenue minus total costs. The maximization problem for each rm
is
1
max 2 (kh) 2 wh rk
l,k
The FOC,
[k] :
h
k
[h] :
k
h
1
2
=r
1