The Macro Impact of Micro Shocks: Beyond Hulten s Theorem
|
|
|
- Lesley Hill
- 6 years ago
- Views:
Transcription
1 The Macro Impact of Micro Shocks: Beyond Hulten s Theorem David R. Baqaee and Emmanuel Farhi Discussion by Basile Grassi 1 1 Department of Economics, Nuffield College, University of Oxford 25th CEPR European Summer Symposium in International Macroeconomics (ESSIM) May 2017 B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 1 / 10
2 Great, interesting and elegant paper with (I think) an important contribution! B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 2 / 10
3 Great, interesting and elegant paper with (I think) an important contribution! Roadmap: 1 Summary: Hulten s Theorem (1978) Beyond Hulten s Theorem 2 Comments Comments #1 on the origin of the results Comments #2 on the quantitave exercice B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 2 / 10
4 Table of Contents 1 Summary 2 Comments B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 2 / 10
5 Hulten s Theorem (1978) Take an efficient economy with N goods produced by N sectors subject to Hicks-neutral shocks A i. Hulten s Theorem: log C log A i = p iy i PC B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 3 / 10
6 Hulten s Theorem (1978) Take an efficient economy with N goods produced by N sectors subject to Hicks-neutral shocks A i. Hulten s Theorem: log C log A i = p iy i PC log C i.e at the first order: N i=1 p i y i PC log A i The effect of shocks on C is summarized by the sales share only! B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 3 / 10
7 Hulten s Theorem (1978) Take an efficient economy with N goods produced by N sectors subject to Hicks-neutral shocks A i. Hulten s Theorem: log C log A i = p iy i PC log C i.e at the first order: N i=1 p i y i PC log A i The effect of shocks on C is summarized by the sales share only! B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 3 / 10
8 Hulten s Theorem (1978) Take an efficient economy with N goods produced by N sectors subject to Hicks-neutral shocks A i. Hulten s Theorem: log C log A i = p iy i PC log C i.e at the first order: N i=1 p i y i PC log A i The effect of shocks on C is summarized by the sales share only! The Diversification Argument (Lucas, 1977): If N is large, CLT Aggr. Volatility decays at a rate 1 N not quantitatively relevant. B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 3 / 10
9 Hulten s Theorem (1978) Take an efficient economy with N goods produced by N sectors subject to Hicks-neutral shocks A i. Hulten s Theorem: log C log A i = p iy i PC log C i.e at the first order: N i=1 p i y i PC log A i The effect of shocks on C is summarized by the sales share only! The Diversification Argument (Lucas, 1977): If N is large, CLT Aggr. Volatility decays at a rate The Granular Hypothesis (Gabaix 2011): If p iy i PC relevant. 1 N not quantitatively relevant. is fat-tail, Aggr. Volatility decays at a much slower rate quantitatively B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 3 / 10
10 Hulten s Theorem (1978) Take an efficient economy with N goods produced by N sectors subject to Hicks-neutral shocks A i. Hulten s Theorem: log C log A i = p iy i PC log C i.e at the first order: N i=1 p i y i PC log A i The effect of shocks on C is summarized by the sales share only! The Diversification Argument (Lucas, 1977): If N is large, CLT Aggr. Volatility decays at a rate The Granular Hypothesis (Gabaix 2011): If p iy i PC relevant. 1 N not quantitatively relevant. is fat-tail, Aggr. Volatility decays at a much slower rate quantitatively The fat tail comes from either Random Growth (Gabaix 2011) or from the I-O Network (Acemoglu et al. 2012) B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 3 / 10
11 Hulten s Theorem (1978) Take an efficient economy with N goods produced by N sectors subject to Hicks-neutral shocks A i. Hulten s Theorem: log C log A i = p iy i PC log C i.e at the first order: N i=1 p i y i PC log A i The effect of shocks on C is summarized by the sales share only! The Diversification Argument (Lucas, 1977): If N is large, CLT Aggr. Volatility decays at a rate The Granular Hypothesis (Gabaix 2011): If p iy i PC relevant. 1 N not quantitatively relevant. is fat-tail, Aggr. Volatility decays at a much slower rate quantitatively The fat tail comes from either Random Growth (Gabaix 2011) or from the I-O Network (Acemoglu et al. 2012) The fat tail case is quantitatively (Carvalho and Grassi 2017) and empirically (Di Giovanni et al. 2014, Mangerman 2016) relevant. B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 3 / 10
12 Beyond Hulten s Theorem Main implication of the first order approx of Hulten s Theorem: The structure of the economy does not really matter B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 4 / 10
13 Beyond Hulten s Theorem Main implication of the first order approx of Hulten s Theorem: But, at the second order: where The structure of the economy does not really matter ( ) 2 log C (log A i ) 2 = λ i ξ λ j 1 1 d log ξ + λ ρ i j =i ij d log A i B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 4 / 10
14 Beyond Hulten s Theorem Main implication of the first order approx of Hulten s Theorem: But, at the second order: where λi = p iy i PC The structure of the economy does not really matter ( ) 2 log C (log A i ) 2 = λ i ξ λ j 1 1 d log ξ + λ ρ i j =i ij d log A i is the sales share B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 4 / 10
15 Beyond Hulten s Theorem Main implication of the first order approx of Hulten s Theorem: But, at the second order: where The structure of the economy does not really matter ( ) 2 log C (log A i ) 2 = λ i ξ λ j 1 1 d log ξ + λ ρ i j =i ij d log A i λi = p iy i PC is the sales share ξ = Total sales PC is the sum of sales share: the Input-Output Multiplier B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 4 / 10
16 Beyond Hulten s Theorem Main implication of the first order approx of Hulten s Theorem: But, at the second order: The structure of the economy does not really matter ( ) 2 log C (log A i ) 2 = λ i ξ λ j 1 1 d log ξ + λ ρ i j =i ij d log A i where λi = p iy i PC is the sales share ξ = Total sales PC is the sum of sales share: the Input-Output Multiplier 1 1 ρij = log(λ i/λ j ) log A measures how much relative sales change following a i shock. ρ ij is the macro-elasticity of substitution. B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 4 / 10
17 Beyond Hulten s Theorem Main implication of the first order approx of Hulten s Theorem: But, at the second order: The structure of the economy does not really matter ( ) 2 log C (log A i ) 2 = λ i ξ λ j 1 1 d log ξ + λ ρ i j =i ij d log A i where λi = p iy i PC is the sales share ξ = Total sales PC is the sum of sales share: the Input-Output Multiplier 1 1 ρij = log(λ i/λ j ) log A measures how much relative sales change following a i shock. ρ ij is the macro-elasticity of substitution. 2 nd order term is the change in sector i s sales share following a shock = B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 4 / 10
18 Beyond Hulten s Theorem Main implication of the first order approx of Hulten s Theorem: But, at the second order: The structure of the economy does not really matter ( ) 2 log C (log A i ) 2 = λ i ξ λ j 1 1 d log ξ + λ ρ i j =i ij d log A i where λi = p iy i PC is the sales share ξ = Total sales PC is the sum of sales share: the Input-Output Multiplier 1 1 ρij = log(λ i/λ j ) log A measures how much relative sales change following a i shock. ρ ij is the macro-elasticity of substitution. 2 nd order term is the change in sector i s sales share following a shock = change in aggregate sales to GDP ratio B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 4 / 10
19 Beyond Hulten s Theorem Main implication of the first order approx of Hulten s Theorem: But, at the second order: The structure of the economy does not really matter ( ) 2 log C (log A i ) 2 = λ i ξ λ j 1 1 d log ξ + λ ρ i j =i ij d log A i where λi = p iy i PC is the sales share ξ = Total sales PC is the sum of sales share: the Input-Output Multiplier 1 1 ρij = log(λ i/λ j ) log A measures how much relative sales change following a i shock. ρ ij is the macro-elasticity of substitution. 2 nd order term is the change in sector i s sales share following a shock = change in aggregate sales to GDP ratio minus the change in sales share of other sectors B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 4 / 10
20 Beyond Hulten s Theorem The macro impact of micro shock: ( ) log C C λ i log(a i )+ λ i ξ λ j 1 1 log(a ρ i ) 2 d log ξ + λ i log(a j =i ij d log A i ) 2 i now, depends on the structure of the economy through the elasticities ξ the input-output multiplier, ρi,j the macro elasticity of substitution. B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 5 / 10
21 Beyond Hulten s Theorem The macro impact of micro shock: ( ) log C C λ i log(a i )+ λ i ξ λ j 1 1 log(a ρ i ) 2 d log ξ + λ i log(a j =i ij d log A i ) 2 i now, depends on the structure of the economy through the elasticities ξ the input-output multiplier, ρi,j the macro elasticity of substitution. How do these macro elasticities map to structural elasticities? B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 5 / 10
22 Beyond Hulten s Theorem The macro impact of micro shock: ( ) log C C λ i log(a i )+ λ i ξ λ j 1 1 log(a ρ i ) 2 d log ξ + λ i log(a j =i ij d log A i ) 2 i now, depends on the structure of the economy through the elasticities ξ the input-output multiplier, ρi,j the macro elasticity of substitution. How do these macro elasticities map to structural elasticities? Section 3: Derive a fairly general structural model with CES everywhere, intermediate input and labor reallocation. B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 5 / 10
23 Beyond Hulten s Theorem The macro impact of micro shock: ( ) log C C λ i log(a i )+ λ i ξ λ j 1 1 log(a ρ i ) 2 d log ξ + λ i log(a j =i ij d log A i ) 2 i now, depends on the structure of the economy through the elasticities ξ the input-output multiplier, ρi,j the macro elasticity of substitution. How do these macro elasticities map to structural elasticities? Section 3: Derive a fairly general structural model with CES everywhere, intermediate input and labor reallocation. Section 4,6: Particular cases in order to buid intuition on the importance of each term. B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 5 / 10
24 Beyond Hulten s Theorem The macro impact of micro shock: ( ) log C C λ i log(a i )+ λ i ξ λ j 1 1 log(a ρ i ) 2 d log ξ + λ i log(a j =i ij d log A i ) 2 i now, depends on the structure of the economy through the elasticities ξ the input-output multiplier, ρi,j the macro elasticity of substitution. How do these macro elasticities map to structural elasticities? Section 3: Derive a fairly general structural model with CES everywhere, intermediate input and labor reallocation. Section 4,6: Particular cases in order to buid intuition on the importance of each term. Section 7: Some results with general Input-Output model B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 5 / 10
25 Beyond Hulten s Theorem The macro impact of micro shock: ( ) log C C λ i log(a i )+ λ i ξ λ j 1 1 log(a ρ i ) 2 d log ξ + λ i log(a j =i ij d log A i ) 2 i now, depends on the structure of the economy through the elasticities ξ the input-output multiplier, ρi,j the macro elasticity of substitution. How do these macro elasticities map to structural elasticities? Section 3: Derive a fairly general structural model with CES everywhere, intermediate input and labor reallocation. Section 4,6: Particular cases in order to buid intuition on the importance of each term. Section 7: Some results with general Input-Output model Section 8: Calibrate BC exhibits Skewness and Kurtosis Revisite the effect of the 70s oil shock B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 5 / 10
26 Table of Contents 1 Summary 2 Comments B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 5 / 10
27 Comment #1: 2 nd order relevant for large shocks Section 4, Macro Elasticities of Substitution Consider the model of Section 4: CES utility, decreasing return to scale, no intermediate inputs σ Hulten Normal PDF(std=0.1) Note: x-axis log A i ; y-axis log C C ; σ the structural elast. of substitution of utility; span of control β = 0.8 B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 6 / 10
28 Comment #1: 2 nd order relevant for large shocks Section 6, Input-Output Multiplier Consider the model of Section 6: 1 sector, final good used as intermediate inputs, with a CES production function. 0.5 θ Hulten Normal PDF(std=0.1) Note: x-axis log A i ; y-axis log C C ; θ the structural elast. of substitution in production; share of intermediate input a = 1/2 B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 7 / 10
29 Comment #1: 2 nd order relevant for large shocks Does deviation from the Hulten s theorem comes from large shocks? If yes, then it is related to Acemoglu et al. (2017). Even if, in your case, the tail risk comes from non-linearities. It would be nice to use the same asymptotic methodology than in Acemoglu et al. (2017). The oil shock experiment in Section 8 is thus very relevant. B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 8 / 10
30 Comment #2: Is the calibration it too extreme? In section 8, you calibrate the structural model. Production function is a CES (θ) aggregation of value-added and a composite of intermediate goods X k with X k = ( N l=1 ) ε ω k,l x ε 1 ε 1 ε lk B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 9 / 10
31 Comment #2: Is the calibration it too extreme? In section 8, you calibrate the structural model. Production function is a CES (θ) aggregation of value-added and a composite of intermediate goods X k with X k = ( N l=1 ) ε ω k,l x ε 1 ε 1 ε lk In your calibration, the value of ε is while the other elasticities of substitution are around θ = 0.3 or σ = 0.4. This is basically assuming Leontieff production function. B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 9 / 10
32 Comment #2: Is the calibration it too extreme? In section 8, you calibrate the structural model. Production function is a CES (θ) aggregation of value-added and a composite of intermediate goods X k with X k = ( N l=1 ) ε ω k,l x ε 1 ε 1 ε lk In your calibration, the value of ε is while the other elasticities of substitution are around θ = 0.3 or σ = 0.4. This is basically assuming Leontieff production function. Section 4: Leontieff and some decreasing return to scale strong magnification of negative shocks. B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 9 / 10
33 Conclusion Beyond Beyond Hulten s theorem The literature have shown, theoretically, empirically and quantitively, that the Diversification Argument fails: Business Cycle is probably explained by shocks on dissaggregate units B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 10 / 10
34 Conclusion Beyond Beyond Hulten s theorem The literature have shown, theoretically, empirically and quantitively, that the Diversification Argument fails: Business Cycle is probably explained by shocks on dissaggregate units And, as you show, the detailed structure of the economy matters. B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 10 / 10
35 Conclusion Beyond Beyond Hulten s theorem The literature have shown, theoretically, empirically and quantitively, that the Diversification Argument fails: Business Cycle is probably explained by shocks on dissaggregate units And, as you show, the detailed structure of the economy matters. What happen if you deviate from efficient economies? imperfect competition (Baqaee 2016, Grassi 2017) financial frictions (Bigio and La O 2016) sticky prices (Pasten, Schoenle and Weber 2016, 2016) B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 10 / 10
36 Conclusion Beyond Beyond Hulten s theorem The literature have shown, theoretically, empirically and quantitively, that the Diversification Argument fails: Business Cycle is probably explained by shocks on dissaggregate units And, as you show, the detailed structure of the economy matters. What happen if you deviate from efficient economies? imperfect competition (Baqaee 2016, Grassi 2017) financial frictions (Bigio and La O 2016) sticky prices (Pasten, Schoenle and Weber 2016, 2016) For non-efficient economies, sectoral policy might have macro effects. B. Grassi (Oxford) Beyond Hulten s Theorem (Baqaee and Farhi) 23/05/2017, ESSIM 10 / 10
The Propagation of Monetary Policy Shocks in a Heterogeneous Production Economy
The Propagation of Monetary Policy Shocks in a Heterogeneous Production Economy E. Pasten 1 R. Schoenle 2 M. Weber 3 1 Banco Central de Chile and Toulouse University 2 Brandeis University 3 Chicago Booth
Working Paper Series. Price rigidities and the granular origins of aggregate fluctuations. No 2102 / October 2017
Working Paper Series Ernesto Pasten, Raphael Schoenle, Michael Weber Price rigidities and the granular origins of aggregate fluctuations ECB - Lamfalussy Fellowship Programme No 2102 / October 2017 Disclaimer:
Nominal Rigidity and the Idiosyncratic Origin of Aggregate. Fluctuations
Nominal Rigidity and the Idiosyncratic Origin of Aggregate Fluctuations Ernesto Pasten, Raphael Schoenle, Michael Weber Februay 2016 PRELIMINARY AND INCOMPLETE PLEASE DO NOT CITE Abstract We study the
Production Networks: A Primer
Production Networks: A Primer Vasco M. Carvalho Alireza Tahbaz-Salehi October 2018 Abstract This article reviews the literature on production networks in macroeconomics. It presents the theoretical foundations
NBER WORKING PAPER SERIES PRICE RIGIDITIES AND THE GRANULAR ORIGINS OF AGGREGATE FLUCTUATIONS. Ernesto Pasten Raphael Schoenle Michael Weber
NBER WORKING PAPER SERIES PRICE RIGIDITIES AND THE GRANULAR ORIGINS OF AGGREGATE FLUCTUATIONS Ernesto Pasten Raphael Schoenle Michael Weber Working Paper 23750 http://www.nber.org/papers/w23750 NATIONAL
Price rigidities and the granular origins of aggregate fluctuations
Bank of Finland Research Discussion Papers 3 2018 Ernesto Pasten Raphael Schoenle Michael Weber Price rigidities and the granular origins of aggregate fluctuations Bank of Finland Research Bank of Finland
CEMMAP Masterclass: Empirical Models of Comparative Advantage and the Gains from Trade 1 Lecture 3: Gravity Models
CEMMAP Masterclass: Empirical Models of Comparative Advantage and the Gains from Trade 1 Lecture 3: Gravity Models Dave Donaldson (MIT) CEMMAP MC July 2018 1 All material based on earlier courses taught
International Trade Lecture 16: Gravity Models (Theory)
14.581 International Trade Lecture 16: Gravity Models (Theory) 14.581 Week 9 Spring 2013 14.581 (Week 9) Gravity Models (Theory) Spring 2013 1 / 44 Today s Plan 1 The Simplest Gravity Model: Armington
The welfare cost of energy insecurity
The welfare cost of energy insecurity Baltasar Manzano (Universidade de Vigo) Luis Rey (bc3) IEW 2013 1 INTRODUCTION The 1973-1974 oil crisis revealed the vulnerability of developed economies to oil price
DSGE-Models. Calibration and Introduction to Dynare. Institute of Econometrics and Economic Statistics
DSGE-Models Calibration and Introduction to Dynare Dr. Andrea Beccarini Willi Mutschler, M.Sc. Institute of Econometrics and Economic Statistics willi.mutschler@uni-muenster.de Summer 2012 Willi Mutschler
Combining the Granular and Network Origins of Aggregate Fluctuations
Combining the Granular and Network Origins of Aggregate Fluctuations A. Hempfing J. Schulz M. Milaković September 21, 2018 Working Paper Abstract The desire to understand business cycle fluctuations, trade
Dynamics and Monetary Policy in a Fair Wage Model of the Business Cycle
Dynamics and Monetary Policy in a Fair Wage Model of the Business Cycle David de la Croix 1,3 Gregory de Walque 2 Rafael Wouters 2,1 1 dept. of economics, Univ. cath. Louvain 2 National Bank of Belgium
14.461: Technological Change, Lecture 4 Competition and Innovation
14.461: Technological Change, Lecture 4 Competition and Innovation Daron Acemoglu MIT September 19, 2011. Daron Acemoglu (MIT) Competition and Innovation September 19, 2011. 1 / 51 Competition and Innovation
The Microeconomic Foundations of Aggregate Production Functions
The Microeconomic Foundations of Aggregate Production Functions David Rezza Baqaee UCLA Emmanuel Farhi Harvard January 11, 2019 Abstract Aggregate production functions are reduced-form relationships that
Granular Comparative Advantage
Granular Comparative Advantage Cecile Gaubert cecile.gaubert@berkeley.edu Oleg Itskhoki itskhoki@princeton.edu Stanford University March 2018 1 / 26 Exports are Granular Freund and Pierola (2015): Export
Internation1al Trade
4.58 International Trade Class notes on 4/8/203 The Armington Model. Equilibrium Labor endowments L i for i = ; :::n CES utility ) CES price index P = i= (w i ij ) P j n Bilateral trade ows follow gravity
Input-biased technical progress and the aggregate elasticity of substitution: Evidence from 14 EU Member States
Input-biased technical progress and the aggregate elasticity of substitution: Evidence from 14 EU Member States Grigorios Emvalomatis University of Dundee December 14, 2016 Background & Motivation Two
Discussion of Riccardo DiCecio \Comovement: It's not a Puzzle" Matteo Iacoviello Boston College
Discussion of Riccardo DiCecio \Comovement: It's not a Puzzle" Matteo Iacoviello Boston College THE QUESTION Question: can we construct a coherent DSGE macro model that explains the comovement puzzle?
Real Business Cycle Model (RBC)
Real Business Cycle Model (RBC) Seyed Ali Madanizadeh November 2013 RBC Model Lucas 1980: One of the functions of theoretical economics is to provide fully articulated, artificial economic systems that
14.461: Technological Change, Lecture 3 Competition, Policy and Technological Progress
14.461: Technological Change, Lecture 3 Competition, Policy and Technological Progress Daron Acemoglu MIT September 15, 2016. Daron Acemoglu (MIT) Competition, Policy and Innovation September 15, 2016.
14.461: Technological Change, Lecture 4 Technology and the Labor Market
14.461: Technological Change, Lecture 4 Technology and the Labor Market Daron Acemoglu MIT September 20, 2016. Daron Acemoglu (MIT) Technology and the Labor Market September 20, 2016. 1 / 51 Technology
Granular Comparative Advantage
Granular Comparative Advantage Cecile Gaubert cecile.gaubert@berkeley.edu Oleg Itskhoki itskhoki@princeton.edu RASA IX International Conference Washington DC November 218 1 / 28 Exports are Granular Freund
The Network Origins of Aggregate Fluctuations Daron Acemoglu Vasco M. Carvalho Asuman Ozdaglar Alireza Tahbaz-Salehi October 2011
The Network Origins of Aggregate Fluctuations Daron Acemoglu Vasco M. Carvalho Asuman Ozdaglar Alireza Tahbaz-Salehi October 2011 Barcelona GSE Working Paper Series Working Paper nº 587 The Network Origins
Measuring the Gains from Trade: They are Large!
Measuring the Gains from Trade: They are Large! Andrés Rodríguez-Clare (UC Berkeley and NBER) May 12, 2012 Ultimate Goal Quantify effects of trade policy changes Instrumental Question How large are GT?
Economic Growth: Lecture 12, Directed Technological Change
14.452 Economic Growth: Lecture 12, Directed Technological Change Daron Acemoglu MIT December 6, 2018 Daron Acemoglu (MIT) Economic Growth Lecture12 December 6, 2018 1 / 62 Directed Technological Change
Structural change in a multi-sector model of the climate and the economy
Structural change in a multi-sector model of the climate and the economy Gustav Engström The Beijer Institute of Environmental Economics Stockholm, December 2012 G. Engström (Beijer) Stockholm, December
MIT PhD International Trade Lecture 15: Gravity Models (Theory)
14.581 MIT PhD International Trade Lecture 15: Gravity Models (Theory) Dave Donaldson Spring 2011 Introduction to Gravity Models Recall that in this course we have so far seen a wide range of trade models:
Risk Sharing with (Dis)Aggregate Shocks
Risk Sharing with Dis)Aggregate Shocks Emmanouil Kitsios International Monetary Fund Manasa Patnam CREST ESAE) March, 2014 Abstract In this paper we examine conditions under which optimal risk sharing
Cascades and Fluctuations in an Economy with an Endogenous Production Network
Cascades and Fluctuations in an Economy with an Endogenous Production Network Mathieu Taschereau-Dumouchel Cornell University September 2017 1/25 Introduction Production in modern economies involves a
Endogenous Growth: AK Model
Endogenous Growth: AK Model Prof. Lutz Hendricks Econ720 October 24, 2017 1 / 35 Endogenous Growth Why do countries grow? A question with large welfare consequences. We need models where growth is endogenous.
General Examination in Macroeconomic Theory SPRING 2013
HARVARD UNIVERSITY DEPARTMENT OF ECONOMICS General Examination in Macroeconomic Theory SPRING 203 You have FOUR hours. Answer all questions Part A (Prof. Laibson): 48 minutes Part B (Prof. Aghion): 48
Do Financial Factors Drive Aggregate Productivity? Evidence from Indian Manufacturing Establishments
Do Financial Factors Drive Aggregate Productivity? Evidence from Indian Manufacturing Establishments N. Aaron Pancost University of Chicago January 29, 2016 Motivation Does financial development increase
A Modern Equilibrium Model. Jesús Fernández-Villaverde University of Pennsylvania
A Modern Equilibrium Model Jesús Fernández-Villaverde University of Pennsylvania 1 Household Problem Preferences: max E X β t t=0 c 1 σ t 1 σ ψ l1+γ t 1+γ Budget constraint: c t + k t+1 = w t l t + r t
Global Value Chain Participation and Current Account Imbalances
Global Value Chain Participation and Current Account Imbalances Johannes Brumm University of Zurich Georgios Georgiadis European Central Bank Johannes Gräb European Central Bank Fabian Trottner Princeton
Network Connectivity, Systematic Risk and Diversification
Network Connectivity, Systematic Risk and Diversification Monica Billio 1 Massimiliano Caporin 2 Roberto Panzica 3 Loriana Pelizzon 1,3 1 University Ca Foscari Venezia (Italy) 2 University of Padova (Italy)
Economic Growth: Lecture 13, Directed Technological Change
14.452 Economic Growth: Lecture 13, Directed Technological Change Daron Acemoglu MIT December 13, 2011. Daron Acemoglu (MIT) Economic Growth Lecture 13 December 13, 2011. 1 / 71 Directed Technological
Rising Wage Inequality and the Effectiveness of Tuition Subsidy Policies:
Rising Wage Inequality and the Effectiveness of Tuition Subsidy Policies: Explorations with a Dynamic General Equilibrium Model of Labor Earnings based on Heckman, Lochner and Taber, Review of Economic
Cascades in Networks and Aggregate Volatility
Cascades in Networks and Aggregate Volatility Daron Acemoglu, Asuman Ozdaglar, and Alireza Tahbaz Salehi First version: August 2010 This version: October 2010 Abstract We provide a general framework for
Topic 3. RBCs
14.452. Topic 3. RBCs Olivier Blanchard April 8, 2007 Nr. 1 1. Motivation, and organization Looked at Ramsey model, with productivity shocks. Replicated fairly well co-movements in output, consumption,
Aggregate Supply. A Nonvertical AS Curve. implications for unemployment, rms pricing behavior, the real wage and the markup
A Nonvertical AS Curve nominal wage rigidity nominal price rigidity labor and goods markets implications for unemployment, rms pricing behavior, the real wage and the markup Case 1: Sticky W, Flexible
Endogenous Information Choice
Endogenous Information Choice Lecture 7 February 11, 2015 An optimizing trader will process those prices of most importance to his decision problem most frequently and carefully, those of less importance
Macroeconomics Field Exam. August 2007
Macroeconomics Field Exam August 2007 Answer all questions in the exam. Suggested times correspond to the questions weights in the exam grade. Make your answers as precise as possible, using graphs, equations,
PhD Topics in Macroeconomics
PhD Topics in Macroeconomics Lecture 18: aggregate gains from trade, part two Chris Edmond 2nd Semester 2014 1 This lecture Arkolakis, Costinot, Donaldson and Rodríguez-Clare (2012wp) 1- Absence of pro-competitive
4- Current Method of Explaining Business Cycles: DSGE Models. Basic Economic Models
4- Current Method of Explaining Business Cycles: DSGE Models Basic Economic Models In Economics, we use theoretical models to explain the economic processes in the real world. These models de ne a relation
Network Connectivity and Systematic Risk
Network Connectivity and Systematic Risk Monica Billio 1 Massimiliano Caporin 2 Roberto Panzica 3 Loriana Pelizzon 1,3 1 University Ca Foscari Venezia (Italy) 2 University of Padova (Italy) 3 Goethe University
International Prices and Exchange Rates Econ 2530b, Gita Gopinath
International Prices and Exchange Rates Econ 2530b, Gita Gopinath Model variable mark-ups CES demand: Constant mark-ups: ( ) εin µ in = log ε in 1 Given that markups are constant, Γ in = 0. ( ) θ = log.
Notes on Winnie Choi s Paper (Draft: November 4, 2004; Revised: November 9, 2004)
Dave Backus / NYU Notes on Winnie Choi s Paper (Draft: November 4, 004; Revised: November 9, 004) The paper: Real exchange rates, international trade, and macroeconomic fundamentals, version dated October
1. Money in the utility function (start)
Monetary Economics: Macro Aspects, 1/3 2012 Henrik Jensen Department of Economics University of Copenhagen 1. Money in the utility function (start) a. The basic money-in-the-utility function model b. Optimal
Advanced Macroeconomics II. Monetary Models with Nominal Rigidities. Jordi Galí Universitat Pompeu Fabra April 2018
Advanced Macroeconomics II Monetary Models with Nominal Rigidities Jordi Galí Universitat Pompeu Fabra April 208 Motivation Empirical Evidence Macro evidence on the e ects of monetary policy shocks (i)
14.452: Introduction to Economic Growth Problem Set 4
14.452: Introduction to Economic Growth Problem Set 4 Daron Acemoglu Due date: December 5, 12pm noon Please only hand in Question 3, which will be graded. The rest will be reviewed in the recitation but
Culture Shocks and Consequences:
Culture Shocks and Consequences: the connection between the arts and urban economic growth Stephen Sheppard Williams College Arts, New Growth Theory, and Economic Development Symposium The Brookings Institution,
1 The Basic RBC Model
IHS 2016, Macroeconomics III Michael Reiter Ch. 1: Notes on RBC Model 1 1 The Basic RBC Model 1.1 Description of Model Variables y z k L c I w r output level of technology (exogenous) capital at end of
Resolving the Missing Deflation Puzzle. June 7, 2018
Resolving the Missing Deflation Puzzle Jesper Lindé Sveriges Riksbank Mathias Trabandt Freie Universität Berlin June 7, 218 Motivation Key observations during the Great Recession: Extraordinary contraction
Clarendon Lectures, Lecture 1 Directed Technical Change: Importance, Issues and Approaches
Clarendon Lectures, Lecture 1 Directed Technical Change: Importance, Issues and Approaches Daron Acemoglu October 22, 2007 Introduction New technologies not neutral towards different factors/groups. 1.
THE CASE OF THE DISAPPEARING PHILLIPS CURVE
THE CASE OF THE DISAPPEARING PHILLIPS CURVE James Bullard President and CEO 2018 ECB Forum on Central Banking Macroeconomics of Price- and Wage-Setting June 19, 2018 Sintra, Portugal Any opinions expressed
How Costly is Global Warming? Implications for Welfare, Business Cycles, and Asset Prices. M. Donadelli M. Jüppner M. Riedel C.
How Costly is Global Warming? Implications for Welfare, Business Cycles, and Asset Prices. M. Donadelli M. Jüppner M. Riedel C. Schlag Goethe University Frankfurt and Research Center SAFE BoE-CEP workshop:
Forward Guidance without Common Knowledge
Forward Guidance without Common Knowledge George-Marios Angeletos 1 Chen Lian 2 1 MIT and NBER 2 MIT November 17, 2017 Outline 1 Introduction 2 Environment 3 GE Attenuation and Horizon Effects 4 Forward
Optimal Monetary Policy with Informational Frictions
Optimal Monetary Policy with Informational Frictions George-Marios Angeletos Jennifer La O July 2017 How should fiscal and monetary policy respond to business cycles when firms have imperfect information
Chapter 9. Natural Resources and Economic Growth. Instructor: Dmytro Hryshko
Chapter 9. Natural Resources and Economic Growth Instructor: Dmytro Hryshko Motivation We want to understand growth in the presence of the earth s finite supply of arable land and nonrenewable natural
CREDIT SEARCH AND CREDIT CYCLES
CREDIT SEARCH AND CREDIT CYCLES Feng Dong Pengfei Wang Yi Wen Shanghai Jiao Tong U Hong Kong U Science and Tech STL Fed & Tsinghua U May 215 The usual disclaim applies. Motivation The supply and demand
NBER WORKING PAPER SERIES PRODUCTIVITY AND MISALLOCATION IN GENERAL EQUILIBRIUM. David Rezza Baqaee Emmanuel Farhi
NBER WORKING PAPER SERIES PRODUCTIVITY AND MISALLOCATION IN GENERAL EQUILIBRIUM. David Rezza Baqaee Emmanuel Farhi Working Paper 24007 http://www.nber.org/papers/w24007 NATIONAL BUREAU OF ECONOMIC RESEARCH
Cascades and Fluctuations in an Economy with an Endogenous Production Network
Cascades and Fluctuations in an Economy with an Endogenous Production Network Mathieu Taschereau-Dumouchel Cornell University January 2018 Abstract This paper proposes a simple theory of production in
The Kuhn-Tucker and Envelope Theorems
The Kuhn-Tucker and Envelope Theorems Peter Ireland EC720.01 - Math for Economists Boston College, Department of Economics Fall 2010 The Kuhn-Tucker and envelope theorems can be used to characterize the
Modelling Czech and Slovak labour markets: A DSGE model with labour frictions
Modelling Czech and Slovak labour markets: A DSGE model with labour frictions Daniel Němec Faculty of Economics and Administrations Masaryk University Brno, Czech Republic nemecd@econ.muni.cz ESF MU (Brno)
Empirical and Policy Performance of a Forward-Looking Monetary Model
Empirical and Policy Performance of a Forward-Looking Monetary Model Alexei Onatski and Noah Williams FRB San Francisco Conference on Interest Rates and Monetary Policy March 19-20, 2004 Comments by Jeff
Monetary Policy and Unemployment: A New Keynesian Perspective
Monetary Policy and Unemployment: A New Keynesian Perspective Jordi Galí CREI, UPF and Barcelona GSE April 215 Jordi Galí (CREI, UPF and Barcelona GSE) Monetary Policy and Unemployment April 215 1 / 16
Productivity and Misallocation in General Equilibrium. March 14, 2018
Productivity and Misallocation in General Equilibrium David Baqaee Emmanuel Farhi LSE Harvard March 14, 2018 Aggregation Theorems for Efficient Economies For efficient economy, Solow (1957): dlogy = dlogtfp
Financial Frictions in Production Networks
Financial Frictions in Production Networks Saki Bigio UCLA and NBER Jennifer La O Columbia University and NBER November 9, 2015 Abstract We study how an economy s production architecture determines the
Long and Plosser Meet Bewley and Lucas
Long and Plosser Meet Bewley and Lucas Feng Dong Yi Wen March, 208 prepared for the Carnegie Rochester NYU conference on public policy Abstract We develop a N-sector business-cycle network model a la Long
Lecture 6: Competitive Equilibrium in the Growth Model (II)
Lecture 6: Competitive Equilibrium in the Growth Model (II) ECO 503: Macroeconomic Theory I Benjamin Moll Princeton University Fall 204 /6 Plan of Lecture Sequence of markets CE 2 The growth model and
The Dynamics of the U.S. Trade Balance and the Real Exchange Rate: The J Curve and Trade Costs? by George Alessandria (Rochester) Horag Choi (Monash)
Discussion of The Dynamics of the U.S. Trade Balance and the Real Exchange Rate: The J Curve and Trade Costs? by George Alessandria (Rochester) Horag Choi (Monash) Brent Neiman University of Chicago and
Explaining Rising Wage Inequality: Explorations With a Dynamic General Equilibrium Model of Labor Earnings with Heterogeneous Agents
Explaining Rising Wage Inequality: Explorations With a Dynamic General Equilibrium Model of Labor Earnings with Heterogeneous Agents James J. Heckman, Lance Lochner, and Christopher Taber April 22, 2009
What You Match Does Matter: The Effects of Data on DSGE Estimation
Discussion of What You Match Does Matter: The Effects of Data on DSGE Estimation by Pablo Guerron-Quintana Marc Giannoni Columbia University, NBER and CEPR Workshop on Methods and Applications for DSGE
Extended IS-LM model - construction and analysis of behavior
Extended IS-LM model - construction and analysis of behavior David Martinčík Department of Economics and Finance, Faculty of Economics, University of West Bohemia, martinci@kef.zcu.cz Blanka Šedivá Department
Indeterminacy and Sunspots in Macroeconomics
Indeterminacy and Sunspots in Macroeconomics Friday September 8 th : Lecture 10 Gerzensee, September 2017 Roger E. A. Farmer Warwick University and NIESR Topics for Lecture 10 Tying together the pieces
Aggregate Demand, Idle Time, and Unemployment
Aggregate Demand, Idle Time, and Unemployment Pascal Michaillat (LSE) & Emmanuel Saez (Berkeley) September 2014 1 / 44 Motivation 11% Unemployment rate 9% 7% 5% 3% 1974 1984 1994 2004 2014 2 / 44 Motivation
Notes on Foerser, Sarte, Watson (2011) "Sectoral vs. Aggregate Shocks: A Structural Factor Analysis of Industrial Production"
Notes on Foerser, Sarte, Watson (2011) "Sectoral vs. Aggregate Shocks: A Structural Factor Analysis of Industrial Production" Research questions 1. How correlated are shocks to industries productivities?
Productivity and Misallocation in General Equilibrium
Productivity and Misallocation in General Equilibrium David Rezza Baqaee LSE Emmanuel Farhi Harvard January 23, 2018 Abstract We provide a general non-parametric formula for aggregating microeconomic shocks
Micro Data for Macro Models Topic 4: Firm Lifecycle
Micro Data for Macro Models Topic 4: Firm Lifecycle Thomas Winberry November 20th, 2017 1 Stylized Facts About Firm Dynamics 1. New entrants smaller than the average firm 2. Young firms more likely to
Globalization and the Gains from Variety (QJE 2006)
Globalization and the Gains from Variety (QJE 2006) Christian Broda & David Weinstein LMU July, 2011 Outline Motivation Related Literature Data Empirical Strategy Results Robustness Conclusion Motivation
Aggregate Demand, Idle Time, and Unemployment
Aggregate Demand, Idle Time, and Unemployment Pascal Michaillat (LSE) & Emmanuel Saez (Berkeley) July 2014 1 / 46 Motivation 11% Unemployment rate 9% 7% 5% 3% 1974 1984 1994 2004 2014 2 / 46 Motivation
NBER WORKING PAPER SERIES THE NETWORK ORIGINS OF LARGE ECONOMIC DOWNTURNS. Daron Acemoglu Asuman Ozdaglar Alireza Tahbaz-Salehi
NBER WORKING PAPER SERIES THE NETWORK ORIGINS OF LARGE ECONOMIC DOWNTURNS Daron Acemoglu Asuman Ozdaglar Alireza Tahbaz-Salehi Working Paper 19230 http://www.nber.org/papers/w19230 NATIONAL BUREAU OF ECONOMIC
Cross-Country Differences in Productivity: The Role of Allocation and Selection
Cross-Country Differences in Productivity: The Role of Allocation and Selection Eric Bartelsman, John Haltiwanger & Stefano Scarpetta American Economic Review (2013) Presented by Beatriz González January
Economic Growth
MIT OpenCourseWare http://ocw.mit.edu 14.452 Economic Growth Fall 2008 For information about citing these materials or our Terms of Use, visit: http://ocw.mit.edu/terms. 14.452 Economic Growth: Lecture
The Great Moderation in the Japanese Economy
The Great Moderation in the Japanese Economy Jun-Hyung Ko a and Koichi Murase b a Graduate School of Economics, Hitotsubashi University b Sompo Japan.Inc December 9, 00 e-mail: ed07400@g.hit-u.ac.jp Ko
Textbook Producer Theory: a Behavioral Version
Textbook Producer Theory: a Behavioral Version Xavier Gabaix NYU Stern, CEPR and NBER November 22, 2013 Preliminary and incomplete Abstract This note develops a behavioral version of textbook producer
Productivity and Misallocation in General Equilibrium
Productivity and Misallocation in General Equilibrium David Rezza Baqaee LSE Emmanuel Farhi Harvard March 6, 2018 Abstract We provide a general non-parametric formula for aggregating microeconomic shocks
Chapter 9. Natural Resources and Economic Growth. Instructor: Dmytro Hryshko
Chapter 9. Natural Resources and Economic Growth Instructor: Dmytro Hryshko Motivation We want to understand growth in the presence of the earth's nite supply of arable land and nonrenewable natural resources
Macroeconomics Theory II
Macroeconomics Theory II Francesco Franco FEUNL February 2011 Francesco Franco Macroeconomics Theory II 1/34 The log-linear plain vanilla RBC and ν(σ n )= ĉ t = Y C ẑt +(1 α) Y C ˆn t + K βc ˆk t 1 + K
Taylor Rules and Technology Shocks
Taylor Rules and Technology Shocks Eric R. Sims University of Notre Dame and NBER January 17, 2012 Abstract In a standard New Keynesian model, a Taylor-type interest rate rule moves the equilibrium real
Pricing To Habits and the Law of One Price
Pricing To Habits and the Law of One Price Morten Ravn 1 Stephanie Schmitt-Grohé 2 Martin Uribe 2 1 European University Institute 2 Duke University Izmir, May 18, 27 Stylized facts we wish to address Pricing-to-Market:
FEDERAL RESERVE BANK of ATLANTA
FEDERAL RESERVE BANK of ATLANTA On the Solution of the Growth Model with Investment-Specific Technological Change Jesús Fernández-Villaverde and Juan Francisco Rubio-Ramírez Working Paper 2004-39 December
SELECTION EFFECTS WITH HETEROGENEOUS FIRMS: ONLINE APPENDIX
SELECTION EFFECTS WITH HETEROGENEOUS FIRMS: ONLINE APPENDIX Monika Mrázová University of Geneva and CEPR J. Peter Neary University of Oxford, CEPR and CESifo Appendix K: Selection into Worker Screening
On Aggregate Fluctuations, Systemic Risk, and the Covariance of Firm-Level Activity
On Aggregate Fluctuations, Systemic Risk, and the Covariance of Firm-Level Activity Rory Mullen Draft: November, 208 download latest version) Abstract I study firm-level covariance of productivity, sales,
Toulouse School of Economics, Macroeconomics II Franck Portier. Homework 1 Solutions. Problem I An AD-AS Model
Toulouse School of Economics, 2009-200 Macroeconomics II Franck ortier Homework Solutions max Π = A FOC: d = ( A roblem I An AD-AS Model ) / ) 2 Equilibrium on the labor market: d = s = A and = = A Figure
Connecting the dots: Econometric methods for uncovering networks with an application to the Australian financial institutions
Connecting the dots: Econometric methods for uncovering networks with an application to the Australian financial institutions Mikhail Anufriev a b a Economics, University of Technology, Sydney b Business
Lecture 3, November 30: The Basic New Keynesian Model (Galí, Chapter 3)
MakØk3, Fall 2 (blok 2) Business cycles and monetary stabilization policies Henrik Jensen Department of Economics University of Copenhagen Lecture 3, November 3: The Basic New Keynesian Model (Galí, Chapter
Comments on Anomalies by Lu Zhang
Comments on Anomalies by Lu Zhang John H. Cochrane University of Chicago November 2, 2004 Q reminder X X V (K 0, {I t }) = E 0 M t D t = E 0 M t (θ t f( ) t=0 t=0 " 1+ α 2 Ã It!# I t ) s.t. +1 = (1 δ)
The Network Origins of Large Economic Downturns
The Network Origins of Large Economic Downturns Daron Acemoglu Asuman Ozdaglar Alireza Tahbaz-Salehi This version: June 2013 Abstract This paper shows that large economic downturns may result from the
Structural VAR Models and Applications
Structural VAR Models and Applications Laurent Ferrara 1 1 University of Paris Nanterre M2 Oct. 2018 SVAR: Objectives Whereas the VAR model is able to capture efficiently the interactions between the different