Graduate Macro Theory II: Notes on Medium Scale DSGE Models
نویسنده
چکیده
Households in this model consume goods, supply labor, hold money, and save through both bonds and capital (the households own the capital stock). The household block is a little different from how we’ve been working thus far. We assume that there is variable utilization of capital, ut. We assume that the household chooses ut and then leases capital services, k̂t = utkt to the firms, who in turn pay a rental rate, Rt, for those services. This ends up being a modeling assumption that gives rise to the same first order conditions we would otherwise get if the firms owned the capital stock. Second, we assume that there is habit formation in consumption. Third, we assume that there are investment adjustment costs. Fourth, we assume that there are is a preference shock to the utility of leisure. The full household problem can be characterized as follows:
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