HSS310: Macroeconomic Theory and Dynamic Programming

Business Cycle Stylized Facts and Kaldor's Growth Facts

Basic Tools

• HP Filtering

• A Crash Course on Statistics

Bellman Principle

• Bellman Principle

• Bellman Principle: Proof

• Mathematics for Economists

• Banach Space

• Banach Fixed-point Theorem

• Maximum Theorem

• Blackwell's Sufficiency Theorem

Application: Neo-classical Growth Model

• The Guess-and-Verify Method: The Brock and Mirman Model

• The Euler Equation

• The Envelope Theorem

• The Beveniste and Scheinkman Theorem

• The Cass-Koopmans-Ramsey Optimal Growth Model

Value Function Iteration: Coding in a Matlab Program

Useful Economics

• Classical Utility Theory

• Marginal Utility

• The Neo-classical Theory of Firms

• Production Possibility Set

• The Representative Firm Theorem

• Prescott and Mehra's Decentralization Scheme

Stochastic Dynamic Programming

• Stochastic Bellman Principle

• Conditional Expectations

• The Expected Utility Hypothesis

• Savage's Subjective-utility Theorem

• The Rational Expectations Hypothesis

• The Stochastic Euler Equation

• The Stochastic Beveniste and Scheinkman Theorem

Applications to Modern Macroeconomic Models

• The Guess-and-Verify Method: Brock and Mirman's Stochastic Growth Model versus Real Business Cycle Theory

• Friedman's (1957) Permanent Income Hypothesis

• Hall's Random Walk Hypothesis

• The Lucas Asset Pricing Model and Fama's Efficiency Market Hypothesis

• The Diamond-Mortensen-Pissarides Theory of Unemployment