Professional Documents
Culture Documents
Pectl in Veal GDP: 1V1E Fluc':/Uo - Tioyls
Pectl in Veal GDP: 1V1E Fluc':/Uo - Tioyls
Pectl in Veal GDP: 1V1E Fluc':/Uo - Tioyls
b 1 09
Ch.1 : Introduction
to RBC
~ 1V1e (ec(,.tYYin~ fluc':\uo.tioYls tltlo.t occ~( [Vl reed output & ptvlploYtvleVl.t
-."
1C15?J ~ 2. .3 - 2.1"0'/0
1'1bo: 1 .3 - 1. b fI/ p
1Q-=J-O: 3 1 -1.1 ·t
IolA+ 'd- ~eerv\S to be CV\cn'~acte"izect loy (elat;ve1v IOVlg peviods Vt-I.t1~Vl it £li~ltttL~
few 'oe-lov\J,
gton~(ol
MeaVl oeviatioV\
y 0.0003\ 0.034-5
C o.001tJ. b 0.0201
r 0.00163 O.O(,&'O
G -O.OODbS O. Oqb~
it,) No extevvlOJities
-+----------'"1> t
c) ShockS
1) Tec.hVlo109Y Snoc,ks
to<',c....) -:: /A)K- oc LaO
\ ./
4) Po\iticoJ. ~hockS
Gv~te'N\.
ASS()rVlp+iOV\~ :
'l\;~)
'iTs ;;; probCl~irlty thert GtCtte g LNiI\
-
4 eiD" 6 x mt-e,.
OCCtJY"
"
s = S"
lIv\Aev€t A = tec[.,V\olo9Y
v) A
J {$
vt~t,
.j,
1-Ylt) + (3
~ J
t, iY
v\/ 0"
as. lo.boY
\--nc; \.N~ il\cof\llt = LNt V1t
- 111e HH ctivi elLS ii1e pevio et i InCOMe \: ('0 ~,S" "" pliO",: -Ct
$'Cl,vl ~: k-t+ I
- ~~e. t Con~tat\V\.t of
6t
1 Puioril :
l-<!~ + kHI - k~ {, W. Vtt + V"t k t]
L; Cwoou Vtov-J (\I1(,{ch tiMe. tWy'lI C1VOVI.<?
Peviool: - LNo~k
nd
2 lAMe!. CoV75Utvle
- He, ConSl,WAeS all tne. ·lhc.O(Vle· eaYned ",V) t-hi$ peviool. --} . .Ct;+1
not a f'n of £
% 'rh; clitlJ~· eV\ ·froM F€
t
Y'e k t
k t +1
.~
;;t :: c
McAx k.c~ + epkC1-Ylt) +~ t,lfs: · kv~~I(S) + et> kt [1-nt-tI(~)J
At [s + kt-t-I - k-t- WtV\.-b - Vtk~ : )
foe: d;t = _1 -
At = .0
d];.t .£t
~
~Yl-t
= - cP--L + A-tWt; = 0
1-l'l.t
~ot
d..c.-t-t,(S)
-:::
rb 1r~ 1
Ctt-,(S)
- At..., (S) '= 0
d Y\t-t,(S) 1- n-t+,(s)
~
.ct :
7;
1 = 'A;)
, t
(1 )
ht :, 'P _1_, ::
T
l6;W-t; (~)
1- t'4
Vlt+t(S) :
Ai;
_ = L.At~I(G)[1+l't+I(s)J
S' (5)
~ OVl\"( i'ni<; vavia~ (!.aVl eonnect 1 Beg inro the O!?Jec'+lve.. ~.
"I
/ \
1
eO-'\ 1-00
Foe; = 0 -==) ('to = oOAtK t Nt MP",
~
-
=) ( I» -co :: MPL
(Nt = 1-00) AtK t Nt
~ /..
.!...
tk"
~ :::::. C1-cc") Yt
N-f:;
toMpe.titive ~q.fA.i \,btiUM :
~ eOVlsists of cdlo cotiOVlS
- qIAClVl tHie.s \ H H tkooSl 5 [ -c" 1'1., [!:.... t,), VI.., (SB:., '
FioVl c(,."ooSot (K t, K t+l, N· -t, N tot, )
,&
tVu. a-UOw.tion f -Ct , Y\t, [c-tTI CS ), Vtt+,(S)]s:" k t ... , 1 solves HH's prolo\eM .
fu..t Cdlo Ctttl OV'\ (K-t:l K-t-tp Ni;, Nt.... ) ~olves the ~f M'S problEUVI.
DO. :. Sy
-" FOCs 3.. eu~t CoY1stro.iV\ts (.~xe usee{ to Ctl'ltl\"(ze. t~e. (eSOurCe alloco.hoVls."
LL) w = :t..
N
~i,~) V\, (Of N) will be C\. tOVlstc<V\+ g be- 'IVlcUpelllde Vl +of wCt-}eo
- Ft:JM HH,
oc 1-1l4
== (1-oC).1. y.#;
Not
11;Wt _1~~]
At :: "2s
At.. .,(s) L1 +Yt + l (&)}
ep '1 ::::.'~ I- lis ¢ [1 +Yt-tI(S)]
= ~ ¢ (1+V'tt,)
( 1 - Vl tt,)· Wt-t-I
. (2J(1-V\~)
, (1- V't+l)
10
1+Vt+1 (1-Vlt;....)
-0 -!!I
wt +\
Wt,(1+V-t-t-\)
1-Vl t '> 1- Vl t + 1
.~
LeiS"Ufe. IV) ~ eurreVlt p€viocl is ~lgltle( Yela,tive, -to the, \ejgCAVe 'If) ~ thtLt(fJ
pvloci,. 1- Vl t
1- Ylt..-I
i
~
repre,j,8vrreo. OS Opf"i'hAVI"j-h-f CO's'r I
==
= ::::.
U'
v
= ~ L lis [~ [1 + Vt+1 (,)] ( (1-)
s ..c-tof-I(S) JI
4
11
1 := ~E (1 + X't.-t,) ConsvMpfi€M- S~
[wt V\~ ... (1-T~t) Kt - kt...~ ~-t+, ~I + (1 +vu ,) k"bt.J 'DuicS 1M
( 1 + V{..,) - DC Yt+l
k'tH
~
1
Yt - kt-t,
=
~EPC~J ~,
::
~Et~J
2
"cot -::. ~
kt,ot-'
-::--) Lk~TI -== ot1~e-1; {
12
\<t+l - ~Eof)
'It - kt +,
k't+, ==
~e oC ('It - kt-t-.)
kit-, = &~oC Yt
1+f;toa
:::
£It ~
Yt: - ~+I
-:::. y~ - EJ2- '1-t;
1+~(?
:::.
C- ~ ) y~ 1+04~
::::
=
~ub~tHvth~ tVtls into ~ -mV\~eVJcl( cono.ih'oYl 'fl oM p. q
.t. (N~ - ¢ .-L
..ct 1- Y1-t
ocA.
~
At koot Y\~1-ac - k1;
1 + ocp
::: > :1
\4
o-JAere, e '/ 0
,) Sttictll(
Corl CtlV e..
/ ,/p..)::~/,v.."'~~t r
.' OLAtput j; \ineCtv '\Vl tCtpHoJ.
Yt - AtK.-e + ~
g + OVl odditive dLsmv0o.V1ce:
~
;; VlOtk.
kt" ¢~1~\~'
..:..l t
~
Foe blCOMes lineav:
"1 I
Conh0\ V. S pc,.;si\?le vall,lt of ~'V1()(ik.
Foe: c: 1- '2.ec = A f: ~
\/
V
~
1-2ec = _1 2..
1-H' ".. ,
"s 'YK[~"
\
ecs)]
/
~velop~ ~ ~: v~ tK,e,l = (1tA)A
/
:::;;;. (1+Aj (1-2 ec) /
~ /
r-~c
C =
~
[c~
lb
o
~l"a A~ P
-t, -/
~) (1- 26C-t) ::: ~A) Et(At+l)
A-:-/
V'-~Ct) :: Et (%~ Je Ctot;)
./ j;l'1euV' ·fo{lv\
Ct ~ G.t; C-t+,
.-::'y
~Kt -:::
A -=
let :
(!J (1
(!; (1-
+A-fJ) \<t
'() et. "='J '(
- "
~
1+~
cIJ = oc-oo(b . ") oIJ ~
0
t
n1~ \JCtlue.g: cr thi.. PCllOtjVI~h~{S (Vll-{st be- ·fbv 1UL Fo C ·w b~ s·o.h SAe d
,Pl1\" all voJlAes of Kt a..,.J et
c
6 0
~
Kt+\
! K.., -
4 ~(W\~ Btte:h'oYl of '\itt,' S
:::::.
K't-t' Kt + .L e't
(b
'Iou Irtttve., Kt lAMa e-t;
~ f'roclllcL
C1+A) Kt + , •
= (1+A-) [K + j..
1+A
1.1
(f •
(1+A)K+e
d) IMA.cAt ore tVte- etfectr of a oVle--tteVle slttovK. tv ~ on itJe pllth~ Ot Y;1 K, av,.c{ c?
,.
W~ QSSlMVlt '\'t.v-. -fbl\ow,"j AR(1) FWce·5S for tkt- tecVJVlo lo~V ~V1oCV"""
et :=: <p et - 1 4- ~t
l'
<!on~\c£uS as <fYll~-·\1(Vl.l., ~\Ao(Y-
1+A
/q
[
r~:1 ~ ~ ~1[;:1 ~ [;l 0
l10 0
r
l~ ~ [::1 [~ l~ [~1- 1
3
+ ;
- 1
l~ ~ [~:l + [~;:~)J
[~l [~ :lf~:l + [~].o
-:=.
=
r: ~A r[~l + [: ;A]3 [~1· 1
::::
[~ ;] t:l
If
+ [f+A(1;3~+ ~~)J
/
" 2/
/5 09
C) Plat1Vling Pm b\eM
~ tJSe. 2'f1d. we,\mvt 1Vleov-efVl tv (ilaiw. title pflll?lefVl +0 -t1'()d out me PY1'CL$
\1H (5 BentMIioY':
;t = Mo.-x k.,c-t + <P ~(1- V\t) + ~ L i1s l k..c (s) -+ q,k [1- v\CS)] ~
- A [.cot -t k t ... , - Wi; V\~ - (1 +Vi;) ~ J
- '2 A.L5) f.ccS) - wCS) I'll!.) - [ 1 HlS) k H .l i
tJlvp
rO.C; "ct;;
@ =::
wt
@ I"V,-". =
A,w't
fvI gS..c1 1-"'~ '= -::.
~
<pet
1- (lot
1- V'.t;
W(S) :: d> £C$)
1-r1(S)
~'ils ::: A(5)
.cCS)
S 1,2.."",$
~ 'ils cP
1 - r\lS)
= .A (s) trJ CS) \
A ~
L A(S) [1 + yes)]
~
.!.. ~
2. &7i$ L1 -+ yes)]
'ct ..ccs)
1 =: I
.1- ~ L lis J.- [1 -+YCS)] I
..c{; ...c(')
/
2'2
FiYf\ll ~ 6eho.vioY:
v-t ::
.c 1-oC
Mo.xi\ :: Al t Nt - 1Nt.V\t - (1-t Yt-)K t
..1-
.ct.
-= ~ P2.l\s 1
kt + ,
fu(Vl p, '\1 :
Eq,ui \iItlviVM
&0l,,1~
I
2'3.
-Y;
(cp+.n.) not;
= ..n.
tt ~ .il-
4>+51
l
lAm SupplC(
(At -\'fA'§"
'= ~ biN' D~ .
[;((,e-ti ~ i ~Y1~
'24
22 1 09
-'> Key pcuarVle te~.r ()re, QSS i'iJrleet volue-s bo~ec{ OYl o\o~evvohoY\ S VlO+ di{e~tl~ (elo.ted
tv \)vtSlness cycles
f?Jo. - HH'5 b~iora1 responses
.., fhJot~ Input ~VtavU
rvl,(~e,lI\old,ts Bekaviov:
'tVl,'r eKpectafuV\ is Ott +1tv1e 0 bosevl 01""1 dO+Cl Cl+ -\l(LV\t 0 ?
W1C-"ll-tt\V"I~ "\1f.vducut
- ()V1ceytaiV\t~ IYlvolvec{
25
Mo..x Eo LDC
t~o
~
t r '-t
(Ct.l ) - 1
1- If
4>
'
1-~ J
. ~
~{lltei'S:v1,(t g..el"'\f'lV'1{\"~4Nt
iY!J 11 171!- \({,l.y'i+~ ",(1\'\
«WhWIUM.
~~
:::.
~"':.')C1-+Y'-to - £ )
Et .
= &t ~(c:~; )t~l)o ~~!~~,J (1+ Yt-c\)
"--'=<t---¥' ~
~ 5-b [ (C:+ It'1-' f c~~ It+. l
t
7f
l'
(1 + Yt - ~) J
.f-t
CD F(,'~r5. ?OliVi fV1 II (k i7 'l~) (2) i.fr..we,~id<~ tbltCi( h'l: )if"t )(t. J 7 t- )
4 ~~~t b~ opn (,-'It'\£.,._
4rv4.<st I_~ ",p-nOAaA.
~v
If) ._', -=
(k't:)~t) n qlv l "1 'It.... D,ICl,'~
.
f,\ .1:,:
.
I:~(.+ &f C (tt-l:-? V-t, lL)
~oH~ ~
gNen 4W.. p-rici~ ~ . ,
k lk"7'Zt;) ~ kt; (]) A 1(;\\(11 ~F Mf)l1r."Yl k1.'
1'"A:-,\
: qrk. "2.. \
" "'t; J z;;;.!;J
r(.~,tb )
2b
vr
Zt' f (K t , not) Oar-put Ct:.,nsJ'fZullt-- O(ifp~l.r fuVl 0e {,t,/locuted. .ft1 uuveVlt Ct:
'()( \Ylv'e,~hV\eVlt-~
C\Z.S PioJ"~,
tUVtVlOLCXj'i paritJVle:r-tr
gltwlks ~ n:u,\o.OM V
: B:h.
, V\t;
k-t ; ::. =- (1-c(»Yt
kt
Nc:t'hovuJ
! JvQ;M e
I,e U~· IVll:\1UY1CJ. Jl1W'M{J./::: O.J.;i+
:::.
yw Iflt. (l(,te,., + d€pf€c-ia.:Hot\ rtlte (RHS)
t ., ~
us. = t+cJ~ :;. O,Oi..f tY-OIYl K'fcJ.luvu;.{ ::: 0.0-1
~
~ifelo{ ii1; r (o1a.t/Wh\J2- ::: r 0 l{ ~'S
if ~ -= O·b4
C1 . . cP)~ C'/~b
~ "::- 'l.b
'I
L.o.w of' Motion: . _=--:-_~_').(-t_)_-+_(_~ -_6_)_K_-t~1
J..k_t-t-_\
~
f' ~
)~ lV1I/~teli\,
Y1;
f ' 0,1 i 1-0 =.lYOiAiCiVl of O~{\r",tl
't<; WI)~i.tMecl,
?. II) ~\~ f\A.V1 2'
.~
l(.lvvt l09 :
-)"kc~ + ~ ('t-1)hvt Wi:; -:::: - P -O~Ct1"' -+ cPC¥-1) kw -t-t, + Yt+1 - b
=; CoIVeSPOYlJ·tv LCj
P ::: O.ott (6=_1_ = tJ_q'f
1+~
t+
T
1-~ 1 :.
-
)4V1
~
1-cP - n
T ..£
~
.f -::=- '2Vl
'1"
Ma7Y\i ./uJ£ (l.p L\
•
f iC neVl0o,L.<M, t-tCtVl~V\ Owtct S/Y)glewVl (,qgq..)
~ ::: £5
b
.J/;
1 :: 5Vl
Prescott ~
6kv = bh~ - ep~kV\-
.'\" .
\CV\O VIi) ~ 0,1: vd\'! Ct I
o.iJ&.t 1\'\ v,s
ealmllLte, V(XY'(AMAl) b.-r YUnYl~ Ve~(e5SI'oYl ;
2-
V(J.y (~.fM l.t) ~ VOV' C~ivt y) + e Va'/" (A Jvt YL-) - 1. e Cf;V (D~Y) D ~v\..-)
J.
Wt-. ~ ~ I'\-z.
iJ
J'tteaSlAve,MeVlt BvV"ov (4~ V\.) ~ Use, surve'1 fo v
Ch.3
ertj : Planner
Plcm Y1ev-Equilibrium
eq(,tl libriutvlAllocation
AIIDW.tiOr1
PrvclV\.
Fov CaSe Z
l Cl2o""ev 'S )
Tect1Vlo logy:
[ f O(~)Vi» At ~ K~ N~-oc At ]
(;bnstrtti nt ~e,t:
[C i + It - K: N~-c<J At I
r~t+.1c = 11
~v) AGSL{Me- tV10t ikL In"d-1M CCtpi-rM g-rock 15 po~Ih\le.- &- if IS g/Ve-Vl
Ko > 0
rn~M~tlon :
(<7..- It)
~ Ct , Nt, KHI ove c.Vic?Sen b().S"ed on ti-u. info L\vQila.ble., at tlfVl€.- t_
~
corrlfol 'Ia.rial7les
53
- by QubStitutill9 -f'tOrvl +-kt L-e-isurt- Hour!" Cms-rrnlYlt into IV1SWVlTUVlOUS Uti/~ F>,
1-00 .
c/:; + K-t+1 -
<Xl
K t Nt At + C1- ~) DC E Co, 1)
At +, = PAt + "1;.1;+1 St+1 A.- N Co) 6~)
Ko > 0
K. > 0
=
gte.p '+ FOC&
~]
Ct : 1 -==
Ct
oC
Nt ; = CAt) (1- oe)
',,_/~
Kt N;CX)At;
.1l
K-t.tl : (At')
,_/
= ~ Et [A t +1 [<X) <:-,1 N:~~ AH1 + (1-bJ] ~
TVC
. I
, J
111eVlJ eliMj YlCttlY\9 At" ='> PlclYlYl.ev ettui liWvJV1 I'~ ,chafGtctevi'Z.e~ '0'1 f I
J
.1 =
C-t"'
TVc o
-
Not~ There eire. S eq,.LLtdioY7S
f". 8 vaviables: Kt , K t + 1 , Ct , N-I;, At;
58
~tep 5 : "J:Vl+erpremtiDYl
LllboV'"- Lei'llft Cl1oic..e.
00 -00
B -
(J t )
( 1 - DC) Kt Nt At
f t
~
o~ v.\i llR-( . MU~~ M PI..
U1i\flv1 ~ of '-
\DSS Labor Vt11 f.h-t Go.i(\
sn\ib\\t'l
-) OptiMoJ. proviSiOYl of Labov is 6V1oseYl bll eq.uC\.tiIl9 tht COS<Atilikt of supply itt8
i Move- \.Arf,t of labDY (0) w/. tf,u (VICtV'-oinAt 1 pro{}..ucAivThj [C1-oC) J.<;N-oCAtl
t
L
MU ct-J
lJtil~ loSS
-7 -1l1is c-onc;fltion eq,lACttes, at t\tle M~Y~ iV), The. ufr\Hy loss at -nf\lle t
(c{ue to postpoVlifl9 tv next peviod 1 tAVlit of con.l'Uf\Ilph"OVl) :J
~ Tvle elJt!eY'" Eq,uatioVl dnves rVu.. plaVlV'lel'"'~ opn(V1cJ. CoYlWlVlpHOYl &. ,'fIVesi {\'IBVlr
(OVlet itte<ewy/l. itu.. copitM ~iCu(\ltlAlQtiOY\)
5b
\Y
II .
V
00-1 1-OC
vWllvV\ has MP = CO K t 1"' Nt +, At + 1 - ~
~
o 0 TOMoy-yOW'S expected. retu(t') = Et(ooK~~; N~: At + + 1-~)
1
Ct :::0 f (K t ) K t + l ) (
-miS equcdion tells tltlat tt1e ?1C\V1Y\ev- ()~es e:tll yeSOl,ore-es C<.vai lable. IVl
~ eCOYIOM y .
?Jut If -tYJis FeaSi'oi1i'1lf COY1~taiiV\.t l;Je(e VlOt ~atisfiecl ~ et(uaITft-t,
+hen £Ol'Vlt feSOUYCes WOlA,lci Vlot 'oe wed. > .
-Vi
•", A-, lOI1~ Oes titleve.. VlD btAcl ~ DOOI..S (i.e. poIlu noV! ) :;
COVlIU Mevs wo(,(.let lot ~t1eY' off by MOV', r19 oYl tltu. btAct9M line. -' i Ci;
Iji1uCltjOVl Cl ,'os.! stlA.
"Tntflsversalit ConditiOVl (ne) - Musr be f(lilpoucl ?,I) orct..ev-tv (iAle 0lA, I
ce vmiV1type.J' Of etl'.i'lib1o
~~~ ~T (~T) K T o
1
/1fI %a.d.ow ~ (,t. of K. ~ 0 ':7 1Yut-- !;..Ie. ass~ u'/ili'ht if. Srvictly
/
en cre.£!' 1'Y11j .
// ---') we <AVe. gOlvi~ QVI 'Infinite VlOV"ZOVl pfVblefVI,
! ~ .' ...
I f Kt ~ oc ~
\ WQ, ~V1oulcl p(eveVlt titlcxt 1tle. CtApircJ. stoc.k -follows an Q;<plosive ptAttevVl"
~ ~
~ TVC E?V1c;u(e.~ *tat explo~ive poHeY'S <Ave ex:cLvtded 1YO(Vl bei (l~ aV)
eq,udibriulV\ sollAhCiYl.
( ~i(jU- its' p-tJ'et. = 0 -:;:;) iW- stock Vlt!S litO eCOYioMic vcdvu.)
1h1. deYivettion of t(,u... TVC is preseVlt-eet In LA S'e.PCHPte. se.t of V10tes .
e
Ch.4
~t'f~: Competitive
Competitive Equilibrium
Equi\,bviwVl
~t€-p 1: DescviptioVl f>t the f3CJJrlOtll\y
VlO(Vl0gevlOU$ gooel,
-> CoVlsUlVlerS" g, {1'('(Y1S tro.c:lt- comfVIoc:fdies 'IV) tke- vaYiou$ t\tlavkgt s fbv goods
~ pro",
".""
Inputs,
, !
~te,p Q: CDnslAYV\er-s
/rJIIeve, B > 0
lA ( t )
[Vl~+/C =1!
lV) AssuMe/ m itl,tia.1 r:apTW gj-OCK. ;~ poSitive.
[(¥ > 0 1
\J) ~Wcl-l4Stic Pmduc.tivitv 'lttoc[.(
.rAt 1-' - PAt + ~1-1 1
Wvie(e St+1 """NCO)6~)
rnforMLl.nOVI :
(oy ~;)
~ .c::; Yl~ ) ttVld ~k:+, ctve,." CVioseVlloo~ect OYi itJe info Met-do.ble, !At tJ'l\I1e t
\ -v-..I
Conrro\ vavlo.\:7les
,
, ,,
Y y
-ct + k t +, = Wt V1: +Y-t;kJ + (1-b)k;
k: '> 0
y y
S.t. L t + kt-t, IAI..,ltl: + 1'".., k; -+- (1- 6) k;
~t~p 2C:
Foe: (1)
y
Ylt tzJ
= ('f)
T\!C : o
e,
TVC
'-.----~-~-------------\
- lol?ov c1e(V1{).Y1a
&\ Investf\1eVlt clef\l\ClVlct
"Foe:
('-t; =
Lv) COrl s\)(VJ Pti OYl j\/\()y ket : L.c; Gty ) .cf elf
f
:=
b'3
Co (V1 pe:ti h\le., l7q,ui li ltMUIV\ IS elttCtt'ttc,teli zu;l Ic.t +t1i -to llDWiVL~ . ~clinO)/l ~
16 = .i. //VI;;
.£-[
1
;:..;
- ~ ~t [(~tl) (Y H1 + 1 - 2J )]
~TVC
/'
~.r:; ~T (j;) k;.. l 0
r{, =:
cJ]
(J/r- I Gn-t)
t;
f HC
At
k H1
Ch.5
Ct-i.5:: Nonstochastic
NoV"! lJ,tvchosticSteady
£tettcA\fState
gtate.(NSSS)
(NSSS)
r At ~ PCA) =) A]
..1-
Ct
:: ~ Ei; [..1.- (oe K::,' f-J:7 Atl-I-+- '1 - 6)
CHI
1 (2..)
)
0 :=:
liM
'f""oc
E{i>T ~)
C
KTJT
, /
/
//
,i1".rV
1
I~S
, " TT
l~ = [C, N, K] ]
NSSS Ve(;l-ov
- oC --rXJ
1 (1-oe) K N A
E
i
CSlil(J., A ~ 1-)
f1 - oC ~ )-1 + 1 2>
F
1
~tep '2. = ConsiCUx tht- capittJ. A-cC!Arv]lA\e<.noYl CQfl.stIetiYl't": - h-oM C~)
K N1-"" -Sl-Z
of:
C ==-
KoO
-
1-01:
C - f'I - ~
1Z K ,K
00-1 1- 011
f. - K N - S
K
C
V....
::: (~)OO-1 _~
C -- K(F-a) Cq)
-~~
!3 :::: .1 C1-00) F 1-"" (IOJ
C
K(f-~)
~ ~)-oe - .1.+1-cS
(!I
G+ 1- a) ~1-~
j....
~ C+~;~·r K
C = K
oO
N
1-IlCl C
- oK.
..1-:
1- 00
N :::
~+~; ~d) K
00 1-aC
C ::: KN -c\K
-
I := ~K
-00 -1-OC
y ::: K N
Ch.7 : Papers related to RBC
-
Foe:
\ el t k
At
1
t
-
e 6-1
V't
Kt-t-I :
\./
v
--(1)
- ~OVl-L.ineav Equafio YJ
1-Vli;
l /
(
TI'CV1e (tllO co..hoV\ ('lJYlo(inOYl -4 tM[g It!ovv iv itUDca-t-e, ~-w t.oVlslAfV1pnOYl g.. £t.1viflj
fO"to MO«O (rI,
L.HS :
Kt =- dk",
k-t;
A
Yl t :: etVi t
Yl t
..ct
= ~ [1 -Q:L\Vlt
)1=V1
l
l1-Vli· J
1\
'c't =
/I /I
kt+\ V-t
-1 A /\
Q .ct-tr - A ..et-
A
II 1\
Vl Vie
ttl
AQ-1
A
"It-tr Zt
A A
=) fJ:. e(/Mj VlUre.- ..c.t GlM.~ .-CHI
~
/I
11\", - ()..() k. t + Cl 1 Zt
~ V
~tt1.te. V•
. .
~
-t-l
Yf, ~
2. AS (b + CXt-_S) + At,yo
8=0
1
AS -= [QI\Q-1Y = Q AS Q-J
If V lA-I ~ 1. :::) eU'c\tl elelVH?lIltr of AS conve,e;es tv 0 os S ~ 00
= vt. + c3 v t - 1
procluc;.-!ivih.t_ pmductivlh.(
ctiShAt17aVlU- - ~'ltJD(.,V,
..
FroM uS. olaffi., K-u. (e~id.ua,(. I()f -tW... Y~r-i?5siOY1 of 'It on Yt - I t-l;v1o{ t gtiH S/;'00'S
<;ubstaVlhal OtuwCOr-veta.tiOV1 .
~
yVioc;U.,li'' -j Vt a~ &tv\' tlt.,d-oeoYfe,.(a:teol proce5~.
o
~'Solow Residual" rMI
~CVMVIO'j;CoJpa'~
IhIS eC(,iJCl.hoY1 vvlll V10t wor-k if labo"'- ~L.Appl~ flue-hAutes Over- tiMe,
I.-t
. Vt/a4v,-, + ;<t + e,
/' ~.~ ~ $ WOl/K
1
[ o
-ct.] Iy+-] =
1 s;r't
A /I
'11-1e SR yesictuo..t IS trom Cl. yeg(e.ssioVl of' r;('t on SI"t-1
~
lVlQSe. (esictu.oJ. gkou.lct be. i oUVlt1c.cJ. uVldev- tVu rV100W wI!t,'Gh rs o(Vl'Ve.V1 by
9 \::Y1ou<) et;.
0.. £ in 1e.
C[a
2) Divisible Laboy
~ ~ 1<()tQ, e;tll 'InclividucJs o..ve -the. sa IV] e. eve fVJ ageVlt VlDY ks the SCt/Vle Vlumbe( of
. LJ 0ou~.
'V
H
Not~ FlucfvtatiOn<5 In ll0qveljate hOlA(J \!Iovked in ttu. eCOYlDMY are d,()e,. tv
LMOJJ¥g IYl botVi \ #" of- lrlb~fs peopet c,woo£..L tv work CinteVlSive. rvIQyq,'n)
(1\1) .
:tt of peop-U.. eVlteri~ $. Il?utVl(~ +0 wOt!'<' wrc..e
Cex t-e tI15 I v e, (VIC! v"f); 1\ )
<>dl
\V'V
c4tC;h'vi f1( ~ ..Y.
Nt
1} TV]cfi\/i~ible L.abov
~ OH WV\e t!Aa t
1) 11\oi \;icWcJ s ('em eitVJef - set :If of hours (i,e E 'n~o<f V I'lot ev(!,,"'! HH
\ IN()ik. ().
'~_) is e{)1p'/)lfP~
Vlot LNDl"k at all I
en ~\.{ are. UVlCllole. tv tNol"k On inrev(V1eot",tlf e n{.AyVJl:7el" of! VtovuJ
-~ 1niS pc<pev sltJows ttwt OVl eC{;(IDflt1y V'j/ ·''ldivi';/ble,.. LaboV" exViibits V(}'('-!
. h ~
\.()X~ .flv\cfvtCthDn~ In hours wOY v~e..ol (~ati.;e, to prvc!Ucrivirvr
~
bfflCL all HH s o.rQ iW- So.Me =) tVtey all cWoo.l'e the Sa(Vle (Xoh of WOYki~ 9
bvtt +W. 0 utco f\II e 0 f ttu. lotte'1 Ctvill be oJffe re VI. t.
,
1-1' I P
I 1 r----~
~WI~ 'flO I
I
i
, __
I
I
~I
I ,
/ j---
1_ p /em -10
I
I J
I
I I I
-10 0 +10 0
-10 +10
Pm 17 O"st'. h...
T"teLilS"ive. MoV'8 it'\ ~J. DiVl,?!ble LctQO(.· ""V\. .
--" Inolivic:{,lAe<AS Me .fre-e. tv actjtAst eonnfllJ{JUS', ttu.. .:J:h0.P, VtuJ.-{rJ vvovv.eci
lVlis jVIe(tvls, TVlcti violu aJ. fOtc e.s ('Onve)( Prvcl" m o.t .f;'tst; avtr;/.. tiM. III
'o~O,vle.. CO(l CCi,V€,.,
'" Que.~ 0. te.d1V10lo~~ Cbl),lcJ. Il1etVc.£ Il1d;vicilAOt.{S tv !rIovk a. lot (J'V /IIOt ~t clil
*- :. \fo.seVl qJW,(V}e.& tW. NOV\;... convexi -h.1 IS 0. prvpefty of vef'eyenc£ q, 'rf) ttu.. te<S-t.
Df "e>deVlsive. lY1M0 1() " C\;~ €><plQin ~~ Rtll-ll'Me.. \.N'orkeY~ aye. po.lcl (VlOve 'lttaYl
rost-ti'~ wo\,kerS,
He. ecvVl efttool£ aVl'l :t:t of nou"-S rW1Be. he (ikf,S =='? C'cYlnnu()uS
---I-----+~O'+- __ ht
~
No SollttiOVl
~
-ro Make it bOlAV'lcUet by O-HlAI"1i nB 'rnCOf\o1e I's liMitecl
\-It
-+--t---f---+-+--+--~hoC
v) . ~\Ad.ge,t eoY1strvt~n,t:
IoCt +
,=-7C..J
~t ~\f\Itl-\t+ V"t-Kt 1 (2.-)
\;t == ,Y"!VestMent
c.oY1<;{rhamR. fVlt(h1:
:C"~U\) = YE("Zt;) + En:....,) 1Vu. .;+oc k Df (' apitQ;L 1'5 Olrmed loy HHs, w"o wJI CCl.pIW se~i C£.- tv ttu tl'lVl
(PirST c<u-lo-'{eqr<!~SJve p<liWS )
TedttVlO \0'0'( ~Vtocl.<. is CW()IVU d. tv follow tl -Arst - 0 rde~ MClvkov pafC(?SS
I LX)
r
HH rv1Ct )(iMiz,u -tW eiCpec.ted-.Jltl1lAe
;;~ t ~tu(Ct,
D.c.(6L:t
1<)
of otscouVlteGt
!
(,1e-h'vv..L uti1lht:
it ;:; L~isu(e
C.OVlVllK·I~ .-
1'1'<1",,,\
o hI> 1
L--y---.J
he cetYl ehoc1(" eiitne.. .
h. or 0
LCtbov
(lClpil-cJ
in pCl/lod t.
l<;~i~) ~IYt..ee no (?xteo'laN'[ec, ==:) -\W, corvlpetltil1t ~q(,(I;"'(1rJrvl 1<; Peueto optlMtt.£ I
Thg SDGloJ.. planne r'S probleM ,'s
Mo.-x U :: E z:t,..o ~i;, lACe, 1- ht;}
L;, t. e h1t - e
f ( z\, k t , ltlt) = ? t k't
t[
oCt + lit fU\,k t , h.t )
kt+\ = (1-6) kt + ~t
"l t+l == -0 'l.t + ~t"-t-I
o ~ 6 f 1
Cv r-/ l~ot (0, 61.)
1Vlt~ probleNl eoV\ be S'olveet 'oy us"n9 DvnClM;C fUlUqrn/VIy\lf, '1j t-ecvwdqpes
~
13>ellMClVl(S equtlh'orr~
= ere)
~{; Gt +It ~ Zt kf h~-9 + (1-~)kt
qrvlNttA (V1ootet ~
.!:!J
1vrted-R 1'1 pOlo!
1~,~ ~ elasncity of'" ~u0rlitutlOv1 is IYlfi (\ ire g inciepeVldeVlt )k
-+----"'--~~~4 " AC1-!rt.,) _ A(1-ho)..{t;. => logci-l?Jt
""-- loqc i + (1-1j,) A (1-h 17) +
~., 1-1 0
i~i) The eonsuNlptioVl possibilities set is vermc+.eol. tv be.- "Conve)("
. 'IVlctividua,tg caV\ '\ WDik tu.\\ tiM.(. ~o: lD9 Ct 1- A 109 (1-ho)
~ \110+ 8~~:~1t oJI :J.i ", 1 loq C-t + AX(1)o
H'H '5 p'DoleM can ,veach (\. Compen hie equ'd i kmlJrvl.
<:Je-t :::- -fi-ac.HoYl o'r'rw- c.on·t1V11hlt'V! o-P JiH I/vll( wovk. 6" ¥Uve.sl will VlOt
(b"l c(iv j·etittg '\(M COrl ti nUll /VI of t:{~ eVlf$ I nw :2 ~L(b~e.ts"
-vX') Tee vJn 0 lOB\{ rkock I'r CWW'\.Lol tb fOllow cA -Arst - orclev (vtavkov prOCJ?JJ
o\iviS' m -",
Co. 'ooY
CeI.'"t .
Ik t +, = (1-cS)k t + Lt 7
~iA. o{' 11 H :
Vt- i ~ oOi ~
C1 - .it)' -; h.
oc,i- o
(Ilf )
'-.
(02
a1p~OV1\l, 1'61
DJ ~ol(,(+ioV\ Md~oci & eo.libfllnOYl
~
'tWYI/ it's v'\Ot posSib-C.e. +0 ~olue aV1lA,L'1ticMt~ .fof decisiOYl Jules.
~
~~ t-\-o.vtUVl lJ.W Ctppro\(:, Ma:t,'oYI tv e~+iMa:te pa(~{(\Ilete(" volues +'or- ~
I·,
"h'Me se,rie.-r; MOdV) tollolrli~ KyollaVlcl &. P(e~cott)s (i1eittoololoB~
1VI.f,Vl
J
i-trs pDssiw -tv ob+ctin expll'c.it, etecJSIoY1 ruler +&r ~Je.. apprvxiMCtf-t.-
.}J
ee (IY/(;Mi€ S.
]t(f'-tb -eb)
parameter definition value
Results
• Hansen reports seasonally adjusted, logged, and detrended
data in the table. The first two columns are U.s. data, and the
other four are results from his models.
Quarterly u.s time series Economy wi divisible Economy wi indivisble
55.3-84.1 labor labor
Series S.D.sin % Correlations S.D.sin % Correlations S.D.sin %; Correlations i
with output with output with output;
,
------"
Y ~
Output 1.00 ~.16) 1.00 Cf5) 1.00
(GNP) (.00) ..l\ (.21) (.00)
Consumption
Co
It 1.29 .85 .42
(.06)
.89
(.03)
'f' .51
(.08)
.87
(:04)
Invesbnent 8.60 .92 4.24 .99 5.71 .99
~ (.51) (.00) (.70) (.00)
Capital Stock 0.63 0.04 .36 .06 .47 .05
(non-res.) Ie. \ (.07) (.07) \ (.10) (.07)
C~~ ~ ~
Hours h. .76 .' .98 .98
(Non-ag.) ,\.(.DS)"· (.01) .16) (.01)
--
y -
l\,
Productivity
(Output/Hrs)
1.18 .42 .68
(.08)
.98
·(.01)
.50
(.07)
.87
(.03)
I.'r -tW. do:\~ WUe, 10 eel =; S.O :: MQOYl of, olevi~.:I1O'f\g frO(lll h€Vlol.
104-
~L) rV1d.ivi~i,b\e lCAbov' Increase-s- ti1e volatilit~ of' itJe. stvcktlstic. q(OlN~
[SD)
h'v) The 'Ind.ivi~·lb\e ModeA ge()emte~ St~h1ctafo. oevlo"tlovH tltJat ave
c.losey- tv tL1e. obseyved Vo.lue.6.
l.v) The fllA(/tlAl\:tiOV"\~ in Most vo.v1o.lole£ oye lorBey'" foY'" ifle ac.tlAM ecofJol'1Y
t("OVl w( -me.. ·Inctiv)~ib\e. lo.~o( eC0r10My.
fu QMt of'6, h r-elo.t1ve-ro ,1(~) IS vef\j C<iffev(;7nt ~"" oivisible- [abCi ....
V"l~) Acco(.(()'ti(l~ tOy'" tht Ia.rg e 6 ( l1ol.ll~. '\ (Zttio VICl5 betVl 0 p.-v~lefVI in equili\.vviuf\I1
~mducnvlhJ
BV.f>lne~S Cl(cle. i'ht0i'1 ~
\-wwevef, we. WOlA.let expe(..t tiu.. 'WlC::tivic;ib\e lo.wf lVIocLtA 's \'"0.110 to k;1e. hi';} ~eY'
o/c,.. "Inc;l.ivisible. Io.bof 'IMplies tltlo.t all fluCtlACtnOV1$ oewv'" ot- tht l'xteVlsive.. f'VlctYB'Vl.,
l05
F) eellcwsioV\~
-t.,) !hIS IS OV1 eqy.ili\?viuM iVloet~ -\'ho.t exl1ibits L/.VleMp\o'((\1eVlt f/LAc+utl..nOflS
',1'1 f(?SpOVlSe tv oqgveeo.:re. bVJockS o..~ 'I-lH s aye, .ftJ(ceol to ~ntev J< ex'l;-
-\ill€" lobof force in (espoYlSe tv tecVJV10 lo~'( g~OCY..s,
GC) 1"'he, el()~tivit'f of Q(,{:b~titvd10Yl o/vJ leisuYe 'In oliHeve Vlt pevioo.s toY'"
t\tle Dggfego.te econoMi I~ inf1Vlite, &. "!V1o.epeV\(}eV\t of titL eLa5htiht
t~\,) fVlod.e \$ Ir/lth crlvi~il?le lobDY no.ve be.tVl. LM1Successtui o.,t e"pl(;(IV'iV\~
t\tlis -Peo.tnev of ~5. tiMe !!.evle& do.-m..
~v) A ('/lodel -Mat lAlIolNg toy o.O:jUstrvl€t'\t o.\oVlB both tVle hlteVl£ilie. t
Qdevtc;lve. (Y\or~"lns LNoulol. \tutue () 5000. 6\rio.nce. tof s\ll.cce.:isndl~
'(e lative tb prodtlActiV\~ (~) eveV\ vW\0V\ HHs oJe. (elo-~vel"1 l-tVlv-hlli6lj ~
c;lAl?stihAte teiSLl.(~ OCOSS tiMe
~
Q :.
~ iJ"e~
'. ("edict" s~ 1"'(. co((elah'On ~w "'. IJ 1'1.
[09
ft1~(e, ts VlO pVi0Y'j l'eNOn {Ov Vii; to be co((el~teol. In (J.I1Y Vlia~ w/ WI;
~l 0etiro; PD$". gVtDCk.? 'v qovt' ~peV!ti<j{~ ~') Ght:(t lo.bor guppll.( o(..(two.rd.
~
v;,. cOCV1ln~itlivtj MP,- (vfo te['~Y101o~~ glttot-k) lNnl qeVl~t(.,. a
If\e~. conelanoVl ~w Y'lt- J. Wi> 'In RBC.
[;to
i.)
" /' bV APt.
rtle-asulf, hi", (ra*'e( *,OtVl ~ I W~ )
(ew--
~~) AIIOfrJ\''1 for .noneoflve"iHu 1(1 LoboV' S'/,{ppl~ C'o-t l-ttlrlUVI terns)
~~~) Govt 'S lf1coypom-teol In'ID t(u. aVl(1L~SI~
'LIJ) ONlpliCAtllf) [1Abllc g.. fMVlxte .;;pevl{;:!I'1l9 nave. lcltn.n caJ.. effRctg, 0Yl
H H's (\J\U
Ct ::: COYlSLAMptiOY'
e-MU€- oC is ().. pan:l Mete I"'" -ItICtt 00vevns +Cu ti9t1 f>. (\1~~Ylifuctt
Cobb- D0<1la~
G~ =
xj \<esourrL CoYJSt!1AIY1t.
Ie: ~..\-
+ qt; + Kt.. , . c:. Yt- + (1- S) kt;
"---',. 'v-------'
I (;-;r)
(pI L 1.
.. ~
c: == 1<': (l:~V1t,)1-6 + C1-~)kt - k t +, - qt
(/0"" - ceq!;" '= k~ (~tVld-e + (1-,Ok t - kt-+I - t3t
Ct- = k: ~!; V11;)H~ -I- (1 -6) k t - kt-t-, + (oC-1) q-t-
~
_ _- - - - - - - 3
l,J,Ievt- Y-(Y1t)~)kt+l, g~) A-t") ::= k IV\1;e k~ el<p(-6At) + ellpC- At)(1-b)kt
I
J
QDlUhOY1 ex-I'sfs WtltV\ ~ -:::. S :::. 1
Ix
V C•) f S CJ1'vtVl by (~ )
\1
oC::. 1
l1 if
ConcluSion S ;
. ~l
v
1) He, toUYlet/I ghocA,<3 0 t govt tpevWtr~ t-r'att1e'l 'twa VI nc:Vi no to Vlf J i l7iOC t"J}
~
Cqn~ctlCk +0 e)C,'Sh~ flee +ktc-n'e..s assWVlI'''j ~t only t.eVV1VlOI05L(
~l..tovV...s ttffeur ~ ~~(e~ Me.. OlA.~vd,
1Vu.-st. S~cN...1j VLC<-Vt. aY\ flVlpetc"t On ~ MOdLA ~1fV1', Let f +0 t-u[m'1 o Lt>jy
t!M.cI. iiu.'1 L?ontYi wt!.- w tt p(JSih've,. t?oYVt-ltJvh~ ~IN hout''Q vvo-rk.LoL
J..- prod~c..f.vfht
as aLlo~~
.f&.t ,l1oUvlsibil'flrfS 1''1 /I)I!J(J-duft(
z) r;ho0v...~ ot qovt ~p~vtol;~ al~ 0 '~iSflC<\f Cl.59{tcdt IClboy -fVlMk£+- flucAutt~
(elCtsl-i"i 1Z-t3C- MOel.(J.S) f'[ucMc(:h'l/110 if) a~9(eCt,te. :e""plDl{M.L4I\..-t !Aye,
.g) J"-/Yvctud~ Y'\OY\coflvelCi -\1'e.& ',n laboY" ~uppl~ li1Cls alfVloSt no ,'01 P~(;t OVl
~\c.L '\W. V'e,su\-r .{}O(\l\ ChYiStiCtVlO av.ol EicltJeV1baUM Cltiqz.); }, :;: o.otb
O{:t)