# Diary of Econ 244, Spring 22

## 28. Apr 27

We have the third midterm.

## 27. Apr 25

We discuss the problem set, we summarize the issues involved in climate change and we talk briefly about COVID and Economics and especially, inequaltiy.

## 26. Apr 20

We finish damages; we look at the problem of what to do and we say some things about the nature of the solution.

## 25. Apr 18

We look at the optimization problems. We start damages.

## 24. Apr 13

We start at Non-Structural Carbon Circulation Models

## 23. Apr 11

We continue with the model of climate change. We look at non-linearities and tipping points and start the carbon cycle.

## 22. Apr 6

We begin to look at climate change (pg 22).

## 21. Apr 4

We finished looking at externalities.

## 20. Mar 30

We finish social insurance. We start to look at externalities.

## 19. Mar 28

We have the second midterm.

## 18. Mar 23

We finish Social Security. We talk about social insurance. Second Homework is due.

## 17. Mar 21

We finish looking at how our theory accounts for international differences in hours worked. We talk about Social Security (247).

## 16. Mar 16

We finish social welfare functions. We look at the problem of a household with consumption, and labor and capital income taxes. We look at the proposition that labor and consumption taxes are the same with and without labor income. We start looking at how our theory accounts for international differences in hours worked.

## 15. Mar 14

We talk about the Modern Monetary Theory and about crypto currencies, especially bitcoin. We finish discussing the marriage penalty and go over the advantages of marriage. We then go over the alternative minimum tax, the earned income tax credit and capital gains. Then we go into normative stuff and social welfare functions.

## 1. Mar 7, and 9 Spring break

## 14. Mar 2

We talk about a few other properties of the U.S. tax system such as progressivity and regressivity. We talk a bit about the extent to which the U.S. has a progressive tax system. (sort of, but there is a bit of regressivity around receiving some transfer payments, the issue of social security, and excise taxes). We talk briefly about the marriage penalty. (slide 209)

## 13. Feb 28

We finish Generational Accounting. We start talking about the U.S. income tax system and its properties (193).

## 12. Feb 23

We continue the Ricardian Propositions and its exceptions: Borrowing constraints, transfers of the tax burden (to the extent that altruism is not operational), and non lump sum taxation (looking for examples of it, like the poll tax or the tax of height). We start looking at The Fiscal Situation in the U.S. and Generational Accounting. We go over a summary of Gokhale's Generational Accounting findings.

## 11. Feb 21

We finish uncertainty going over the problem of log utility. We start Part IV, Positive Theory of Government Activity discussing the budget constraint of the government. We describe how to link model and data in terms of fiscal policy and we start the Ricardian proposition. (165)

## 10. Feb 16

We have the first midterm. It covers up to what we have seen, including income uncertainty with quadratic utility and how to pose a maximization of expected utility.

## 9. Feb 14

The first homework is due. We answer some questions of the homework. We go over income risk in detail. We characterize the solution under quadratic utility. We pose the problem of expected utility maximization using the probabilities of each state.

## 8. Feb 9

We answer questions about the homework. We go over income risk. We talk about various issues involved with quadratic utility.

## 7. Feb 7

We finish the many period lifemodel including an example and how it fares with respect to the empirical evidence. We discuss various explanations for consumption over the life cycle to be humped shape. We look at constant relative risk aversion preferences. We start income risk. (Slide 131)

## 6. Feb 2

We discuss distortionary taxation with lump sum transfers. We talk about 3 special topics, bankruptcy, GDP measurement and the fall of labor share and its 3 candidate explanations. We start with Part III, the life cycle model. (to 104)

## 5. Jan 31

We review the proposition of welfare consequences of interest rate changes. We looking at the general equilibrium model (the two period Overlapping Generations Model). We discuss the steady state (capital, wages, interest rate, consumption). We look at dynamics. We look at population growth. We start looking at distortionary taxation with lump sum transfers. (To 82)

## 4. Jan 26 in PCPSE 203

We discuss comparative statics, solving the model with perfect borrowing. I look at the proposition of welfare consequences of interest rate changes. We look at borrowing constraints. We discuss bankruptcy and some properties of the U.S. bankruptcy code. We start the general equilibrium (slide 60)

## 3. Jan 24 in PCPSE 203

I continue the two period model with the constraints, the first order conditions and discuss the guarantee of a unique solution. (slide 46)

## 2. Jan 19

I finish with the facts (cyclical behavior, debt). I start the two period model with the description of the objective function (slide 33).

##### Link to Recording

Passcode: *?f^9J#n

## 1. Jan 12

We go over the rules of the course and some of the facts of the U.S. Government sector (up to slide 19).

##### Link to Recording

Passcode: XgWt80#S