Computational-Economics

Code for a computational economics course I am teaching at the University of Edinburgh. This year's curriculum consists of...

The Solow Model:

A discrete time version of Robert Solow's classic 1956 article entitled: A Contribution to the Theory of Economic Growth. In this lab students...

• Explore some of the basic implications of the Cobb-Douglas production function using 3D graphics and contour plots.
• Learn to write basic Python functions to code the key equations of the Solow model.
• Solve for the steady state of the Solow model analytically and numerically.
• Learn the basics of symbolic and numerical differentiation in order to assess the stability properties of the model's steady state.
• Introduction to Object-Oriented Programming (OOP) and simulation using the Python class solowModel.
• Analyze the response of the model to shocks to the key exogenous parameter model, the savings rate.

The Ramsey Model:

A discrete time version of Frank Ramsey's classic 1928 article entitled: A Mathematical Theory of Saving. In this lab students...

• Explore some of the basic implications for inter-temporal optimization of the CRRA utility function using 3D graphics and contour plots.
• Learn to write basic Python functions to code the key equations of the Ramsey model.
• Solve for the steady state of the Ramsey model analytically and numerically.
• More basics of symbolic and numerical differentiation in order to assess the stability properties of the model's steady state. Need to calculate the Jacobian and its eigenvalues/vectors!
• More Object-Oriented Programming (OOP) and simulation using the Python class ramseyModel.
• Solve for a linear approximation to the optimal policy function for consumption.
• Solve for the full non-linear optimal policy function for consumption using the forward-shooting algorithm.
• Compare the linear approximation with the full non-linear optimal policy to discover how good the linear approximation actually is!
• Some basic welfare analysis of the Ramsey model.
• Finally, we consider the response of a Ramsey economy to a shock to the growth rate of technology.

A Real Business Cycles (RBC) model:

Basic RBC model from Chapter 5 of David Romer's Advanced Macroeconomics. In this lab students...

• Explore some of the optimal trade-off between consumption and labor/leisure using 3D graphics and contour plots.
• Explore some of the basic implications for inter-temporal optimization with two choice variables (i.e., consumption and labor supply!).
• Solve for the steady-state of the RBC model numerically.
• Solve for a linear approximation to the recursive equilibrium law of motion for the model using techniques from Uhlig (1997) implemented in the Python class RBC.
• Generate and analyze impulse response functions and simulate data from the model to show that model correctly captures relative volatilities of investment, output, and consumption.