# Diary of Econ 7210, Spring 24, 2nd Session

## 14. May 1 We discuss a Climate Change Model and maybe an Epi-Macro models and we conclude the course.

## 13. Apr 29 An Endogenous Growth Model and a Model with Small Businesses

## 12. Apr 24 Extreme Value Shocks and Macro and Pandemics

We look at what are extreme value shocks and how they should be used in Macro.

## 11. Apr 22 Towards New Keynesian Models

We start looking at monopolistic competition. We discuss Calvo and Rottemberg pricing. I may name this paper for alternative preferences with interesting properties.

## 10. Apr 17 Other Issues in Aiyagari Type Economies

We continue looking at undirected search using as framework the Aiyagari Economy. We look at unsecured debt. We look at entrepreneurship.

## 9. Apr 15 Aiyagari Economy

We look at the Huggett economy. We look at the Aiyagari Economy and Policy Changes, Welfare and Business cycles in this Economy. We also talk a bit about the Sequence-Space Jacobian (SSJ).

## 8. Apr 10 Midterm

## 7. Apr 8 We Finish Computation of MIT shocks and start the Farmer's problem

We apply the Boppart et al MIT shock approximation to the standard Social planner Model. We start looking at the farmer's problem with shocks and linear technology.

## 6. Apr 3. We finish Industry Equilibria

We look at endogenous entry and exit, stationary equilibrium, adjustment costs. We talk about non-stationary equilibrium. We start the Boppart et al MIT shock approximation.

## 5. Apr 1 We finish Measure Theory and start Industry Equilibria

## 4. Mar 27 Pricing Securities. Endogenous productivity and competitive search.

## 3. Mar 25 OLG. The Lucas Tree. Pricing Securities

We finish OLG. We start the Lucas tree. We look at Lucas trees and derive a pricing condition. We use no arbitrage conditions to price all kind of securities.

## 2. Mar 20 Recursive Equilibria without and with Distortions and some OLG

We finish the discussion of an environment with capital income taxation and government debt. We talk about various forms of habits and/or externalities in consumption. 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 overlapping generation economies.

## 1. Mar 18 Intro. Please read Chapters 1 and 2 of the Krusell et al. book

- 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.