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Macroeconomics of Household Heterogeneity: Inequality and Policy (ECO-AD-MACHOUSE)

ECO-AD-MACHOUSE

Purpose

 

Description

Course Abstract (including student assessment):

This course will introduce you to modern quantitative tools in public finance and macroeconomics to analyse trends in inequality, inter-generational persistence and policy. We will mostly work with overlapping generations models, where heterogeneity will be modelled on the household side. The first part of the course will focus on techniques. We will with models with idiosyncratic risk, spending a lot of time on the solution of these models and extensions of solution methods that mainly concern the household model. In the second part, we will extend the models to aggregate risk and discuss new tools to solve models with aggregate risk. In the third part of the course we will read and discuss research papers using employing the methodologies.
Through the course you will learn how to solve simple models analytically and how to interpret your findings. You will also learn many techniques to solve more complex models quantitatively. Finally, you will learn about actual research papers in this field.

Material:

• Lecture Notes
• Research Papers

Outline:

Part 1: OLG Models with Idiosyncratic Risk

• The 2-Period textbook OLG model
• The 2-Period OLG Model with Idiosyncratic Risk
  • Capital income taxation, pension systems, government debt
• Epstein-Zin-Weil preferences
• The Multi-Period OLG Model with Idiosyncratic Risk:
  • Computing steady states and transitional dynamics.
  • Extensions with endogenous labour supply decisions.
  • Applications to tax and pension reforms.
• Endogenous Grid Method
  • basic method
  • discrete-continuous choice problems
  • endogenous grids in higher dimensions

Part 2: OLG Models with Idiosyncratic and Aggregate Risk

• The 2-Period OLG model with idiosyncratic and aggregate risk
• Krusell-Smith method
• Neural networks and global solution methods

Part 3: Applications of models: research papers


 

ENROL FOR THIS COURSE