Quantitative Dynamic Macroeconomics  


Quantitative Dynamic Macroeconomics (Exercise)

Lecturer: Prof. Dr. Thomas Steger
Date: Monday, 1.15 - 2.45 p.m.
Start: October 15, 2018
Language: English
Place
: PC-Pool 4 (IZ07)

Content

A. An Introduction to Mathematica (nb; pdf; relax_example)

B. Dynamic Macroeconomic Models

1. Solow model (analytical solution, linearization, "shooting", relaxation) (nb; pdf)
2. Ramsey model (linearization, backward integration, relaxation) (nb; pdf)
3. Economic growth with subsistence consumption (nb; pdf)
4. Education and economic growth (nb; pdf; normalization)
5. R&D-based economic growth
6. History versus expectations (nb_Model; nb_compact)
7. Growth under Non-Renewable Resources

Description

Model-based analysis: three steps

  • Step #1: set up an appropriate (!) macroeconomic model
  • Step #2: calibrate the model to match observables
  • Step #3: solve the calibrated model numerically

Methodical skills

  • Solve prominent dynamic general equilibrium models numerically.
  • Apply powerful relaxation algorithm (Trimborn et al., 2008) implemented in Mathematica.
  • Students will be equipped with required knowledge to set up and numerically solve dynamic macroeconomic models.

Projects

Students are expected to conduct 'little quantitative exercises'. More precisely, there are two options: (i) Select a research paper from the branch of dynamic macroeconomics and evaluate the theoretical model numerically. (ii) Think of an interesting empirical phenomenon and try to replicate these phenomena by employing a simple model. Some suggestions comprise:

  1. A Small Climate Change Model (Set up and solve a minimal DICE model to think about the basic mechanisms behind climate change)
  2. Growing like West Germany post WW2: Employment, Investment and Income (Neoclassical growth model with endogenous labor supply)

References: Numerics of Dynamic Systems and Mathematica

  1. Abell, M. and J. Braselton, Differential Equations With Mathematica, 2004, Elsevier.
  2. Gräbe and Kofler, Mathematica - Einführung, Anwendung, Referenz, 5. Auflage, 2007, Pearson.
  3. Huang, C.J. and P.S. Crooke, Mathematics and Mathematica for Economists, Blackwell Publisher, 1997.
  4. Weiß, Christian H., Mathematica, Eine Einführung, 2. Auflage, Dezember 2008, RRZN-Handbücher, Universität Hannover.

letzte Änderung: 14.10.2018