Neo-Classical Growth Model Flashcards
1
Q
Set up of the household problem
A
- Notice the state for the households has three entries:
- Individual capital
- Aggregate capital
- Shock state
2
Q
Contraction mapping theorem
A
3
Q
Equilibrium def in the neoclassical growth model
A
4
Q
Limitations of the representative agent model
A
- It cannot address questions related to wealth, income or consumption distributions
- It may give misleading answers to welfare questions
- I can provide inexact measures
5
Q
Gorman aggregation result
A
6
Q
Gorman preferences definition
A
The indirect utility function is of the form:
7
Q
A note on prudence property
A
8
Q
Equilibrium definition in the stochastic exchange economy
A
9
Q
Production economy equilibrium
A
- Measure of households is stationary
- Q arises from the optimal behavior of households
- Goods market clears
