Macroeconomic Models of Heterogeneous Agents

The purpose of the course is to learn the skills to solve workhorse models in quantitative macroeconomics. We depart from the representative agent assumption and investigate models with heterogeneous agents in incomplete markets. We will spend lecture times to study selected papers in depth. They are papers that represent so-called “Bewley models,” where agents face idiosyncratic risks but are unable to perfectly insure against the uncertainty. We will review the model, equilibrium conditions, calibration and computational methods in each of the papers. There will be computational assignments based on each of the core papers we read. In the meantime, students will start identifying and formulating a question that interests them and writing a report in the form of a research proposal.