An initial listing of the material that I will cover
follows. Things might (and will) be added and deleted, partly
reflecting the audience.
Introduction. What is a Model?
A measurement tool. How big is bla bla ?
A device to assess the implications of changes. What
happens if bla bla bla?
First Question. How big is the contribution of
productivity shocks to aggregate fluctuations: the most basic
Review of the theory. The optimal growth model. Using
dynamic programming to solve for the optimal allocation.
The second welfare theorem. A Recursive version of the
second welfare theorem.
Computation of the model. This will involve the
review of more than one method. And some homeworks. I
will put now the list of things about solving an optimal
decision model through computers that we may see in the
whole course. We will not see all this time though.
Calibration of the model. This is the most important part of
the chapter. So far calibration has been a tainted word with too
many meanings. We will introduce a very disciplined approach to
restrict the model quantitatively. Cooley and Prescott, .
How to measure wage dispersion? Temporary versus
Transition, deterministic evolution over time. Convergence to
a new steady state.
Extensions to the basic question. Does feature bla bla matter?
We will review a few of them to learn about other classes of
economies, which means both a new set of calibration and
Ceria, S. and J. V. Ríos-Rull (1992).
On the existence uniqueness and computability of non-optimal
recursive equilibria in linear quadratic economies.
Unpublished Manuscript, Carnegie Mellon University.
Cubeddu, L. M. and J.-V. Ríos-Rull (2003).
Families as shocks.
Journal of the European Economic Association 1 (2-3),
(Papers and Proceedings of the Seventeenth Annual Congress of the
European Economic Association, Venice, 21-24 August 2002).
Díaz-Gimenez, J., V. Quadrini, and J.-V. Ríos-Rull (1997,
Dimensions of inequality: Facts on the U.S. distributions of
earnings, income, and wealth.
Federal Reserve Bank of Minneapolis Quarterly Review
21 (2), 3-21.
Hansen, G. D. and E. C. Prescott (1995).
Recursive methods for computing equilibria of business cycle models.
In T. F. Cooley (Ed.), Frontiers of Business Cycle Research,
Chapter 2. Princeton: Princeton University Press.
Ríos-Rull, J.-V. (1998).
Computing equilibria in models with heterogenous agents.
In R. Marimon and A. Scott (Eds.), Computational Methods for the
Study of Dynamic Economics, Chapter 9. Oxford University Press.