Lecture Notes for ECN 200E - Macro Theory with Salyer at UC Davis (UCD)

Notes Information

Material Type:Class Note
Class:ECN 200E - Macro Theory
University:University of California - Davis
Term:Spring 1998
  • Special Case
  • Progression
  • Convenience
  • Consumption
  • Substituting
  • Current Period
  • Necessary Condition
  • Differentiate
  • Uncorrelated
  • Interpretation
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Lecture Notes on Dynamic Programming Economics 200E, Professor Bergin, Spring 1998 Adapted from lecture notes of Kevin Salyer and from Stokey, Lucas and Prescott (1989) Outline 1) A Typical Problem 2) A Deterministic Finite Horizon Problem 2.1) Finding necessary conditions 2.2) A special case 2.3) Recursive solution 3) A Deterministic Infinite Horizon Problem 3.1) Recursive formulation 3.2) Envelope theorem 3.3) A special case 3.4) An analytical solution 3.5) Solution by conjecture 3.6) Solution by iteration 4) A Stochastic Problem 4.1) Introducing uncertainty 4.2) Our special case again 4.3) Finding distributions 1 1. A Typical Problem Consider the problem of optimal growth (Cass-Koopmans Model). Recall that in the Solow model the saving rate is imposed, and there is no representation of preferences. The optimal growth model adds preferences for households, and derives an optimal saving rate. Utility is maximized for the representative agent, given the technology that they're faced w...

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