Questions from Macroeconomics

Q: Consider the Barro tax-smoothing model. Suppose there are two

Consider the Barro tax-smoothing model. Suppose there are two possible values of G(t) GH and GL with GH > GL. Transitions between the two values follow Poisson processes (see Sections 7.4 and 11.2). S...

Q: If the tax rate follows a random walk (and if the

If the tax rate follows a random walk (and if the variance of its innovations is bounded from below by a strictly positive number), then with probability 1 it will eventually exceed 100 percent or be...

Q: Suppose there are three voters, 1, 2, and 3

Suppose there are three voters, 1, 2, and 3, and three possible policies, A, B, and C. Voter 1’s preference ordering is A, B, C; voter 2’s is B, C, A; and voter 3’s is C, A, B. Does any policy win a m...

Q: Consider the Tabellini Alesina model in the case where α can only

Consider the Tabellini Alesina model in the case where α can only take on the values 0 and 1. Suppose that there is some initial level of debt, D0. How, if at all, does D0 affect the deficit in period...

Q: Suppose there are a large number of firms, N, each

Suppose there are a large number of firms, N, each with profits given by F(eL)−wL, F(•) > 0, F(•) < 0. L is the number of workers the firm hires, w is the wage it pays, and e is workers’ effort. Effor...

Q: Suppose output in country i is given by Yi = Ai Qie

Suppose output in country i is given by Yi = Ai Qie φEiLi. Here Ei is each worker’s years of education, Qi is the quality of education, and the rest of the notation is standard. Higher output per work...

Q: Suppose the production function is Y = Kα(e φEL)

Suppose the production function is Y = Kα(e φEL)1−α,0

Q: Suppose output is given by Y(t)=K(t

Suppose output is given by Y(t)=K(t)αH(t)β[A(t)L(t)]1−α−β, α>0, β>0, α + β

Q: Consider the model in Problem 4.5. (a

Consider the model in Problem 4.5. (a) What are the balanced-growth-path values of k and h in terms of sk, sh, and the other parameters of the model? (b) Suppose α = 1 3 and β = 1 2. Consider two coun...

Q: Consider the model of Section 4.1 with the assumption that

Consider the model of Section 4.1 with the assumption that G(E)=eφE. Suppose, however, that E, rather than being constant, is increasing steadily: E(t) = m, where m > 0. Assume that, despite the stead...