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Prudence has to do with the response of how additional dimensions of uncertainty impacts the preference or aversion to that uncertainty. To illustrate, prudence (the sign of $u'''(\cdot)$) impacts the …

I have seen the euler equation in discrete time for the baseline neoclassical growth model written as: $$\frac{U'(c_{t+1})}{U'(c_{t})}=\frac{1}{\beta(1+r)}$$ however I have also seen the euler equatio …

The main thing to take away from the SMD theorem is that it motivates the need for equilibrium refinement. One could get very distraught with this result which states that anything can happen with ver …

Ricardian equivalence is a result regarding the ineffectiveness of government due to consumption smoothing behavior of consumers. A primary reason why it fails is due to population turnover (i.e peopl …

Are there any mathematical models of a planned economy like in the soviet union? Specifically id like to know how we would model 5 year plans. Do any exist?

Your standard continuous time cake eating problem is defined as follows: $$\max_{c(t)}\int_0^\infty e^{-rt} \ln (c(t)) dt$$ subject to $$f(k(t))=k(t)$$ $$\dot{k}(t)=-c(t)$$ Approaching this problem by …

I find it difficult to just say government spending follows an AR(1) process this is because you will end up with violating the "No Ponzi Game Condition" on most models including government. To model …

What the authors seem to be doing in the footnote is imposing a condition stating that if intergenerational transfers tend to infinity (say for the case of children of billionaires) there will be no g …

The way you would go about solving this problem is as the ChinG said is by setting up the Hamiltonian. In this case this is: $$\mathcal{H}:e^{-\rho t} \frac{C(t)^{1-\theta}-1}{1-\theta}+\mu(t)\left[Y( …

To get feel of whats going on here more technically usually in intermediate macroeconomics II/intermediate microeconomics II courses we work through examples of Robinson Crusoe Economies. … I think its a great teaching tool, then again I am yet to teach introductory microeconomics and macroeconomics. …

I'm not sure if this is a silly question or overly semantic but I think the term "Crisis" is misunderstood (or at least misunderstood by myself). There are a number of ways the term is used, namely: …

A number of times ive seen the Neoclassical Growth Model and Overlapping Generation Model setups referred to as a "workhorse of modern macroeconomics". What does this mean exactly? …

As a PhD student the standard macroecononomics education I have received (and continue to receive) revolves around the most realistic model of market structure ive seen to date, that being sequential …

I'm an economics PhD student and throughout my macroeconomics education I've found the topic of economic growth always being discussed at great length. …

I've been looking at the cake eating problem over a finite horizion and have been trying to figure out if we can derive a policy function for such a problem. My work is written below. sequence fo …