Assignment 2 - EC7210 Flashcards
Vilka implikationer har det för vår ekonomi om vi låter företagen ha CRS?
This implies that the profits of the firms are equal to zero in equilibrium in every period.
An even more interesting implication of CRS is that the number of firms in the model is not important as long as they behave competitively, i.e. behave as price-takers without any market power.
Under CRS, we could have one firm, two firms or 10 million firms and the total output produced in the economy would be the exact same.
Thus we can use a single representative firm in this model that alone represent the supply side of the whole economy.
Vilka implikationer har det att vi antar att hushållen i vår ekonomi är identiska?
This means that we only need to solve the household problem for
one ”representative” household to derive the optimal consumption and savings
decisions in the economy. Specifically, the demand side of the economy can be
fully understood by just looking at one household.
Vad är Intertemporal Elasticity of Substiution (IES)?
It measures the percentage change in the consumption growth rate as a response to the relative price of consumption tomorrow.
With log preferences, the intertemporal elasticity of substitution is one. A one percent increase in the relative price of consumption tomorrow will de- crease the consumption growth rate by one percent
Ingenting, hon har gått i genom, men han nämnde det och visar det på sida 5 på assigment 2.
Man får fram det genom att loggaritmera eulerekvationen.
Vad är ett resource constraint?
The resource constraint is an equilibrium condition. It basically says that we cannot consume or invest more resources than we produce in the economy. To derive the resource constraint we combine the demand side of the economy with the supply side.
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Här kombineras både företagens produktionsfunktion och hushållens konsumtion och investeringar.
CtLt + It = F (Kt, AtLt)
where CtLt is aggregate consumption, It is aggregate investment and F (Kt, AtLt) is aggregate output or GDP. Note that aggregate savings are given by aggre- gate income minus aggregate consumption. Thus, (42) implies that aggregate savings, St, is equal to aggregate investments, It, in the economy.
Sedan subsituerar man bort It för Kt+1
CtLt + Kt+1 = F (Kt, AtLt) + (1-δ)Kt
Behöver inte memorera det exakt hur det här ser ut, bara jag tänker vad ett resourse är.
Vad säger man att Equlibriet generellt i makron?
Jag använder exempelt här där man vill maximera Ct, Kt+1.
An equilibirum in this economy is a sequence of the endogenous variables {Ct, Kt+1}^∞_t=0 that given some initial capital stock K0 and the exogenously given sequence of populalation and labor augmenting technology {Lt, At}∞
t=0 satisfies the following three conditions which defines the equlibrium.
De som defenierar EQ är då Euler Ekvatioinen, Resourse constraint och Transversality condition.
Vad är Steady State och Balanced Growth path?
A steady state is defined as a competitive equilibrium in which all variables are constant over time.
A balanced growth path is a competitive equilibrium in which all variables grow at constant rates.
Båda dessa kan vara sanna samtidigt beroende på hur variablerna är defenierade. Alltså, t.ex stora och lilla C.
balanced growth path in {Ct, Kt+1} corresponds to a steady state in {ct, kt+1}.
