ECON 102 Lecture Notes - Lecture 9: Standard Deviation, Discounting, Econometrics
Document Summary
Goals of model: learn analytically how variables relate, and how it creates propagation that is endogenous to. Hh behaviour: whether quantities from data can capture stdev, autocorrelation, variance. Parameters to help solve (slide 14 equations): alpha, delta, rho, sigma, beta, eta, psi. Rho, sigma = first order autocorrelation and stdev. Eta and psi = enter into labour preferences. Alpha = from cobb douglas prod function, payment to capital production, and from nipa tables this is around . > i/y divided by k/y can get value from nipa tables, around 12% Rho and sigma = straight from stochastic properties of productivity, and this maps into reality of the solow residual. Beta from interest rate, in steady state we get that beta = 1/1+r. Psi and eta that determines the preferences with respect to labour. Frisch elasticity is for how elasticity of labour changes with wages. Elasticity comes from regression, labour regresses with wages.
