Category Archives: Student Blogs

Update: Critiques of DSGE Models

Hello class, Christian and I are writing our portion of the paper on the critiques of DSGE models. We have chosen the most prominent critiques and have looked at the points of discourse from well-known economists, such as Robert Solow, Anton Korinek, Noah Smith, Roger Farmer, Camilo Tovar, and Paul Krugman. The structure of the paper […] Continue reading

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New York Fed DSGE FRB Model

DSGE model advantages Micro foundations- decisions are based on expectations General equilibrium- interaction between policy actions and households and firm’s behavior Stochastic shocks Evolve over time to keep up with advances The model includes: households, firms, banks, entrepreneurs, and the government Households Supply labor to firms Utility form labor and leisure Shocks to labor supply […] Continue reading

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A Thought on Optimization and Rational Expectations

I just started reading this new book, Misbehaving, by Richard H. Thaler about behavioral economics. I am not too far into it yet but came across something I found interesting. Haler talks about rational expectations and the idea that people make choices in an optimizing behavior. He touches on three problems with these ideas. The […] Continue reading

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Fed’s SIGMA Model

Central Bank Policies- heavy emphasis on fitting short-run properties of the data DSGE models have evolved to include a large array of nominal and real rigidities SIGMA is a multi-country open economy model Compare SIGMA and FRB model for differences in responses to shocks (domestic monetary and fiscal shocks, consumption shocks, risk premium shocks, and […] Continue reading

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Asset Stabilization Critique

Farmer advocates for the stabilization of asset prices in order to prevent unemployment and prevent financial crisis. I contend that losses in the financial markets are necessary as they ensure people aren’t leveraging too highly. If the federal government was to buy whenever prices of financial assets go down there would no longer be a […] Continue reading

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Conservative Carbon Tax Plan (Now Doomed)

Conservative Carbon taxes main points Gradually increasing carbon tax starting at $40 per ton of carbon emissions Return proceeds of tax to Americans to offset higher electricity costs Provide rebates for exporting US companies to remain competitive in global market Reduce regulations and let the new market incentive do the policing There might be hope […] Continue reading

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The 2008 Tightrope Walk

My previous post “Balancing Classical Ideas and Active Policies” talked about why policy makers hold at least somewhat to classical ideals. This post hopes to continue this line of though by examining why the government decided not to bail out so many businesses but not others. Without the Federal Government’s TARP money and the Federal reserve’s […] Continue reading

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“New and Old Keynesians,” Greenwald and Stiglitz

This article discusses the main criticism of all equilibrium models, that no matter how well designed the model or elegant the argument, markets do not always clear. The recurring themes of risk averse firms, and ineffective monetary policy are considered, but Greenwald and Stiglitz turn to the labor market and attempt to explain sticky real […] Continue reading

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The Macroeconomist as Scientist and Engineer

This article written by N. Gregory Mankiw is very similar to what our class has been doing all semester.  Mankiw divided up the schools of thought by whether they are more the science side of economics or the engineering and applied side of economics.  He goes through each school of thought describing what they are and […] Continue reading

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#byeforever GDP

http://www.heritage.org/index/
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