Diary of Econ 4230, Spring 23

We finish social security. We talk about social insurance. We finish social insurance. We may start to look at externalities.

We have the second midterm and the second homework is due in Canvas before the beginning of the midterm.

We talk about the banking crisis that we have had. We further discuss about Social Security.

We look at the proposition that labor and consumption taxes are the same with and without labor income. We look at how our theory accounts for international differences in hours worked. We talk about Social Security (247).

We finish social welfare functions. We discuss how politics relate to the choices of tax systems. We start looking at the problem of a household with consumption, and labor and capital income taxes.

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). Then we go into normative stuff and social welfare functions. We discuss 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. We talk about the Modern Monetary Theory and about crypto currencies, especially bitcoin.

We reviewed the Ricardian proposition, the history of the U.S. income tax and the meaning and properties of a tax code.

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

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. We finish uncertainty going over the problem of log utility. We may 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)

We have the first midterm. It covers all we have seen except income uncertainty.

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. We go over income risk. We talk about various issues involved with quadratic utility.

We answered some questions about the homework. We revisit the notion of distortionary taxation and why would governments use it even when not collecting revenue. We start with Part III, the many period life cycle model.

We review the the general equilibrium model (the two period Overlapping Generations Model) discussing the steady state (capital, wages, interest rate, consumption) and dynamics. We look at population growth. We look at the fall of labor share and its 3 candidate explanations. We discuss distortionary taxation with lump sum transfers. We discuss the effects of distortionary taxation with a tax in first period consumption.

We review the proposition of welfare consequences of interest rate changes. We look at the general equilibrium model (the two period Overlapping Generations Model). We talk about 2 special topics: first bankruptcy and some properties of the U.S. bankruptcy code and then some of the problems of measuring GDP.

We discuss comparative statics, solving the model with perfect borrowing. I look at the proposition of welfare consequences of interest rate changes. We start the general equilibrium (slide 60)

We start the two period model with the description of the objective function (slide 46).

We finish with the facts (cyclical behavior, debt). We talked about inequality in the U.S. and Health. Please read the linked material to have a more thorough presentation/discussion at a later date.

Because of poor student attendance on the first day of class, we repeated the first class going over the main properties of the course. We discussed some properties of National Income and Product Accounts aggregates in the U.S. and we went up tp discussing the main receipts and outlays of the U.S. jurisdictions (Federal vs State and Local). (Slide 19)

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