Computational Macro: Topics

Aiyagari Model

• Review steady state computations in the standard model

  • Endogenous grid method

  • Histogram method

• Transitions between steady states in the standard model

  • global methods

  • perturbational methods

• Extend the standard model

  • Entrepreneurship (discrete choice)

  • Multiple assets (sweat capital or illiquid capital)

• Welfare Analysis

  • Stabilization policies

Additional Topics

• Review continuous time methods

  • control problems using HJB equations

  • distributional dynamics using Kolmogrov Forward equations

• Applications

  • Lucas-Hopenhayan Firm Dynamics

  • update to add capital that is indivisible, nonrentable and bilaterally traded

Structure of the Class

• Will work through the main ideas using a simple case

  • Pseudo code on the board

  • Actual steps using some sample Julia code

• Assignment: Apply the ideas to a slightly more advanced example

• For example:

  • In the Aiyagari part, I will do the class using a model with inelastic labor supply

  • Assignments will have elastic labor supply