Advanced Macroeconomics:
Heterogenous Agent Models
Advanced Macroeconomics:
Heterogenous Agent Models
Course responsible (currently)
Jeppe Druedahl, Associate Professor, University of Copenhagen, Center for Economic Behavior and Inequality
Raphaël Huleux, Post doc, University of Copenhagen
This course introduces you to macroeconomic models, where agents are heterogeneous and face uninsurable idiosyncratic shocks. Such models play a central role in contemporary discussions on both long-run issues, regarding e.g. inequality, taxation and social security, and short-run issues, regarding e.g. the causes of business cycles and the effectiveness on monetary and fiscal policy. You will learn to both solve and simulate simple versions of such models, and interpret the results from full-scale models used in research papers.
The first part of the course is on stationary equilibrium Bewley-Huggett-Aiyagari models, and the roles of uninsurable risk and demographics for the determination of the equilibrium interest rate and inequality. The second part of the course is on the analysis of transitional dynamics in sequence space, and feature discussions on the dynamics of income and wealth inequality and the secular trend of the neutral interest rate. The third part is on Heterogeneous Agent New Keynesian models with pricing frictions, where heterogeneity in the marginal propensity to consume and fluctuations in risk due to e.g. unemployment are important for understanding business-cycle fluctuations.
The analytical and numerical methods you learn in this course is generally applicable to questions in public finance, labor economics, trade and industrial organizations, where heterogeneity plays an important role. Understanding the causes and consequences of inequality is central for advising policy makers on a broad range of topics.
Formalities and details on the exam can be found here.
See CoursePlan.pdf.
The course material is available at https://github.com/NumEconCopenhagen/AdvMacroHet