Reading Group

Heterogeneous Agents in Macroeconomics: with Rajssa Mechelli

Outline

Lecture 1: empirical evidence about the evolution of inequality in income and wealth in the US in the last few decades. The benchmark Aiyagari (1994) model will be introduced, and discussed.

Lecture 2: numerical solution to the consumer problem in partial equilibrium with policy function iteration.

Heterogeneous firms in general equilibrium. A closed-economy version of the heterogeneous-firms model by Melitz (2003).

Lecture 3: solution to the consumer problem with value function iteration. Building distributions.

Lecture 4: numerical solution of the Ayiagari (1994) model.

Lecture 5: students will present the solution to their assignments.