neoclassical-growth-model

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1、NeoclassicalGrowthModelandRicardianEquivalenceContentsContents1.Introduction32.Theneoclassicalgrowthmodel43.Thesteadystate94.Ricardianequivalence115.Conclusions12AppendixA13A1.Themaximizationproblemoftherepresentativefirm13A2.Theequilibriumvalueoftherepre

2、sentativefirm15A3.Thegoverment’sintertemporalbudgetconstraint15A4.Therepresentativehousehold’sintertemporalbudgetconstraint16A5.Themaximizationproblemoftherepresentativehousehold18A6.Theconsumptionleveloftherepresentativehousehold18AppendixB19References21

3、PleaseclicktheadvertDownloadfreebooksatBookBoon.com2NeoclassicalGrowthModelandRicardianEquivalenceIntroduction1.IntroductionThisnotepresentstheneoclassicalgrowthmodelindiscretetime.Themodelisbasedonmicrofoundations,whichmeansthattheobjectivesoftheeconomi

4、cagentsareformulatedexplicitly,andthattheirbehaviorisderivedbyassumingthattheyalwaystrytoachievetheirobjectivesaswellastheycan:employmentandinvestmentdecisionsbythefirmsarederivedbyassumingthatfirmsmaxi-mizeprofits;consumptionandsavingdecisionsbythehousehol

5、dsarederivedbyassumingthathouseholdsmaximizetheirutility.1ThemodelwasfirstdevelopedbyFrankRamsey(Ramsey,1928).However,whileRamsey’smodelisincontinuoustime,themodelinthisarticleispresentedindiscretetime.2Furthermore,wedonotconsiderpopulationgrowth,tokeepth

6、epresentationassimpleaspossible.Theset-upofthemodelisgiveninsection2.Section3derivesthemodel’ssteadystate.Themodelisthenusedinsection4toillustrateRicardianequivalence.Ricardianequivalenceisthephenomenonthat-givencertainassumptions-itturnsouttobeirrelevan

7、twhetherthegovernmentfinancesitsexpendituresbyissuingpublicdebtorbyraisingtaxes.Section5concludes.DownloadfreebooksatBookBoon.com3NeoclassicalGrowthModelandRicardianEquivalenceTheneoclassicalgrowthmodel2.TheneoclassicalgrowthmodelTherepresentativefirmAssum

8、ethattheproductionsideoftheeconomyisrepresentedbyarepresentativefirm,whichproducesoutputaccordingtoaCobb-Douglasproductionfunction:Y=Kα(AL)1−αwith0<α<1(1)ttttYisaggregateoutput,Kistheaggregatecapitalstock,Lisaggregatelabors