# Diary of Econ 7210, Spring 23, 2nd Session

## 1. 5 Mar 24 We review again Competitive finish Measure Theory

## 4. Mar 22 We went over endogenous productivity and competitive search. We start Measure Theory

## 3. Mar 20 Pricing Securities and Competitive Search

- We use no arbitrage conditions to price all kind of securities. We
discuss the role of Preference Shocks. We start endogenous
productivity and competitive search.

## 2. Mar 15 Recursive Equilibria without and with Distortions and the Lucas Tree

- We talk about the economy with a stock market. We start talking
about economies with heterogeneity, starting with wealth. We talk
about other types of heterogeneity (skills) and move into a two
country economy. We start the Lucas tree. We look at Lucas trees
and derive a pricing condition.

## 1. Mar 13 Intro

- I describe the course and discussed some context of what are the
main facts over which macro has to be organized around:
- output per capita has grown at a roughly constant rate
- the capital-output ratio has remained roughly constant (where
capital is measured using the perpetual inventory method
based on past consumption foregone)
- the capital-labor ratio has grown at a roughly constant rate
equal to the growth rate of output
- the wage rate has grown at a roughly constant rate equal to
the growth rate of output
- the real interest rate has been stationary and, during long
periods, roughly constant
- labor income as a share of output has remained roughly constant
- hours worked per capita have been roughly constant.

- I discuss what restrictions do these facts pose on the models
that we use.
- I discuss some of the limitations of this point of view.
- I discuss what is the meaning of an equilibrium (a mapping
from environment to allocations)
- I go very fast over RCE equilibrium. First an optimal one. Then a
few that are not optimal: We pose a government that spends.
- We describe equilibrium of economies where the welfare theorems are
of no use: a government financing a public good with capital income
taxes.
- We discuss an environment with capital income taxation and
government debt.
- We talk about various forms of habits and/or externalities in
consumption.

Author: José Víctor Ríos Rull

Created: 2023-03-22 Wed 15:55

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