Due: Tuesday, April 4, 2017 (in class)1. (60 marks total) In this question, we modify our two-period endowment economy model toinclude a consumption-leisure choice (as we had in LN1). In particular, we now assume thathousehold utility is given byu (c1 ) + v (l1 ) + ? [u (c2 ) + v (l2 )] ,where lt is household leisure in period t. Here, u has the same properties as described inLN3 (i.e., strictly increasing, strictly concave, and limc?0 u0 (c) = ?). The function v hereis new, and gives the household’s utility of leisure in each period. We will assume v hassimilar properties to u: v 0 (l) > 0 when l < 1, v 00 (l) < 0, and liml?0 v 0 (l) = ?. We will alsomake the additional assumption that v 0 (1) = 0. As in LN1, we assume that the householdhas a total endowment of one unit of time, so that 0 ? lt ? 1, with labour supply equal toNts = 1 ? lt . On the production side, we will assume that output is produced according the¯ (i.e., we have f (n, k) = n + k), where k¯ is thesimple production function yt = zt (nt + k)exogenous level of capital in each period. Notice that f here is not (strictly) concave, and inparticular fnn = fkk = fnk = 0. This will not turn out to be too big of a problem in this case.In all other respects, the model is the same as the one we encountered in LN3, including thefact that households save s from the first period to the second at interest rate r. As usual,we will let ? ? 1/(1 + r).(a) (5 marks) Unlike in LN3, household income is now endogenous, and as a result wecan no longer treat yt as pure endowment income. Further, the distinction betweenlabour income and dividend income will now matter (as it did in LN1). In view of this,write down the household’s budget constraints for period one and period two, and thencombine them into a single lifetime budget constraint (LBC). Interpret the LBC in yourown words.(b) (5 marks) Using the assumption that v 0 (1) = 0, argue that the NNC on labour (i.e., theconstraint that lt ? 1) will never bind, and can therefore be ignored. That is, argue thatno household would ever choose lt = 1.(c) (10 marks) Set up the Lagrangian for the household using either the sequence-of-budgetconstraints approach or the single LBC approach (it’s up to you). Obtain all the requiredFOC’s, and combine them to eliminate all Lagrange multipliers. Regardless of yourmethod, you should be able to express the result as two “static” optimality conditions(one for each t = 1, 2) relating ct to lt , and one “intertemporal” condition relating c1 toc2 . Interpret these three conditions in your own words.1 Econ 4021B – Winter 2017Dana Galizia, Carleton University (d) (10 marks) Write down the firm’s labour-demand problem for period t and solve it (theproblem is the same in both periods, so you don’t have to do this twice). The conditionyou get should be a bit unusual, in that it won’t depend on nt . Explain what wouldhappen to the quantity of labour the firm demands if this condition weren’t satisfied,and argue that this can’t happen in an equilibrium (HINT: you will have to use part (b)in your argument). Draw the firm’s labour demand curve. Finally, assuming that thelabour-demand condition you got holds, what is the firm’s period-t profit (i.e., ?t ) equalto?(e) (6 marks) Noting that, as in LN3, it is not possible in this economy for goods to bestored from period one to period two, write down the equilibrium conditions for thegoods market and the labour market in period t (they are the same in both periods, soyou don’t have to do this twice), and determine what this implies for the equilibriumlevel of savings, s.(f) (6 marks) Substitue the equilibrium conditions and the results from the firm’s probleminto the household’s optimality conditions (i.e., into the two static and one intertemporalconditions from part (c)) to eliminate ct , nt , wt , and ?t , t = 1, 2, leaving a system ofthree equations in three endogenous variables: l1 , l2 , and r (or, if you prefer, ? insteadof r).(g) (6 marks) Suppose z1 = z2 = z¯ for some z¯. Using your answer from (f), argue that, inequilibrium, we must have c1 = c2 and l1 = l2 , and solve for the equilibrium interest ratein this case.(h) (12 marks) Suppose z2 increases by a small amount (with no change in z1 ). For each ofl1 , l2 , c1 , c2 , and r, determine whether it will increase, decrease, remain unchanged, orwhether the direction of the change is ambiguous. Interpret your results.2. (40 marks total) In the two-period model with investment of LN6, we found that, in responseto an anticipated increase in productivity, c1 and i always moved in opposite directions (the“comovement problem”). The intuition for this was that, since z2 has no effect on y1 in equi¯ which doesn’t depend on z1 ), and since c1 + i = y1 ,librium (in equilibrium, y1 = z1 f (1, k),the only way for i to increase is if c1 decreases, and vice versa. In this question, we modifyour model to allow y1 to potentially increase in response to an increase in z2 , and see whetherthis “fixes” the comovement problem.Specifically, we modify our model of LN6 by introducing variable capital utilization. In particular, let µt denote the fraction of capital that is actually used by the firm in period t, sothat yt = zt f (nt , µt kt ). We also assume that the amount of depreciation from period 1 to 2is increasing in the amount of capital used in period 1. In particular, the law of motion forcapital is now k2 = [1 ? ?(µ1 )]k1 + i, where the function ?(µ) is strictly increasing (? 0 (µ) > 0)2 Econ 4021B – Winter 2017Dana Galizia, Carleton University and strictly convex (? 00 (µ) > 0). Capital utilization µt will be an additional choice variablefor the firm, with the restriction that this choice must satisfy 0 ? µt ? 1. In all other respectsthe model will be the same as in LN6 (including that households inelastically supply one unitof labour each period).(a) (4 marks). Write down the goods market and labour market equilibrium conditions foreach period. Use the labour market equilibrium conditions to eliminate n1 and n2 in thegoods market conditions, leaving two equations (one for each period).(b) (6 marks) Totally differentiate the expression you got in part (a) for period 1 with respectto z2 . Based on the result, is it possible for c1 and i to move in the same direction?Compare your answer to the case we encountered in LN6, and explain (in words) anysimilarities or differences.(c) (4 marks) As in LN6, the share price in period 2 is given simply by p2 = d2 , and themanager disburses all profits as dividends, i.e., d2 = ?2 . Write down the manager’sobjective function for period 2 (i.e., taking k2 as given). Without taking any first-orderconditions, argue that the manager will always set µ2 = 1.(d) (12 marks) As in LN6, the share price in period 1 is given by p1 = d1 + ?d2 , andd1 + i = ?1 . Assuming µ2 = 1, and that the manager wishes to maximize p1 , write downhis maximization problem (i.e., the objective function and any constraints) in terms ofn1 , n2 , i, k2 , and µ1 . Set up the Lagrangian for the firm, and obtain the FOC’s (assumethat the inequality constraints on µ1 never bind). Substitute the Lagrange multiplier outof these five FOC’s to obtain four optimality conditions for the firm(e) (8 marks) As in LN6, the household’s optimality condition is ?u0 (c2 )/u0 (c1 ) = 1/(1 + r).Combine this with the law of motion for capital, the equilibrium conditions from part (a),and the firm’s optimality conditions from (b) and (c) to get a system of three equationsin the three endogenous variables c1 , k2 , and µ1 . (HINT: two of these conditions willlook similar to equations (32) and (33) from LN6.)(f) (6 marks) Using your results from part (e), argue that, in equilibrium, µ1 will not changein response to a change in z2 (i.e., that dµ1 /dz2 = 0). Has the comovement problembeen “solved” by adding variable capital utilization to the model? 3

 

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Below is a link to the concepts of aggregate demand (AD) and aggregate supply (AD). Use this information to answer parts A thru D on AD and AS (additional links to this area are in the bibliography section of the syllabus):

http://economics.about.com/od/aggregatedemandsupply/ss/aggregate.htm

A. Describe the AD, AS equilibrium point.
B. Assume the federal government reduces its budget deficit by reducing spending, assume nothing else changes, what affect what affect would that have on the AD?
C. American consumers currently have a high, on average, level of credit card debt If consumers decided to reduce their spending on products and services and, instead, used that money to reduce their debt, what affect would this have on AD and AS?
D. When the federal government offered the “cash for clunkers” car program, how did this affect the AD and AS?

Case assignment expectations:

Use information from the modular background readings as well as any good quality resource you can find. Make sure you cite all resources you use and provide a reference list at the end of your paper.

LENGTH: 4 typed and double-spaced pages.

In addition to the overall quality, depth, grammar, and organization of the paper, the following will, in particular, be assessed:

1. Analytical skills that allow you to draw conclusions, questions 3,4 and 5 on federal budget projections.

2. Critical thinking skills, question 5, on formulating policy about budgetary matters

 

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Watch the Youtube video first and then read the articles. Write a one paper about the articles provided. Cite as necessary. Due by 4:00pm tomorrow. Thanks

 

VIDEO: http://gregmankiw.blogspot.com/2011/02/death-by-price-control.html

 

ARTICLE 1: http://healthland.time.com/2012/07/02/a-court-allows-payment-for-bone-marrow-should-people-be-able-to-sell-their-parts/

 

ARTICLE 2: http://www.bloomberg.com/bw/articles/2013-10-17/body-parts-for-sale-by-desperate-u-dot-s-dot-workers#rshare=email_article

 

• Posted: 4 years ago
• Due: 24/11/2015
• Budget: $15

 

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Please put the references at the bottom of the assignment .

Attached the first page which is the assignment and the other 4 pages to help with the assignment .

Week 7 Linear Regression Exercises Simple Regression Research Question: Does the number of hours worked per week (workweek) predict family income (income)? Using Polit2SetA data set, run a simple regression using Family Income (income) as the outcome variable (Y) and Number of Hours Worked per Week (workweek) as the independent variable (X). When conducting any regression analysis, the dependent (outcome) variables is always (Y) and is placed on the y-axis, and the independent (predictor) variable is always (X) and is placed on the x-axis. Please submit the questions and answers only, no SPSS output. You do not need a APA title or reference page. make sure to save your document with the correct title as directed in the submission area. Follow these steps when using SPSS: 1. Open Polit2SetA data set. 2. Click on Analyze, then click on Regression, then Linear. 3. Move the dependent variable (income) in the box labeled “Dependent” by clicking the arrow button. The dependent variable is a continuous variable. 4. Move the independent variable (workweek) into the box labeled “Independent.” 5. Click on the Statistics button (right side of box) and click on Descriptives, Estimates, Confidence Interval (should be 95%), and Model Fit, then click on Continue. 6. Click on OK. 7. Check your SPSS ouptupt. Assignment: Through analysis of the SPSS output, answer the following questions. Make sure to place the number of the question next to your answer. 1. What is the total sample size? 2. What is the mean income and mean number of hours worked? 3. What is the correlation coefficient between the outcome and predictor variables? Is it significant? How would you describe the strength and direction of the relationship? 4. What it the value of R squared (coefficient of determination)? Interpret the value. 5. Interpret the standard error of the estimate? What information does this value provide to the researcher? 6. The model fit is determined by the ANOVA table results (F statistic = 37.226, 1,376 degrees of freedom, and the p value is .001). Based on these results, does the model fit the data? Briefly explain. (Hint: A significant finding indicates good model fit.) 7. Based on the coefficients, what is the value of the y-intercept (point at which the line of best fit crosses the y-axis)? 8. Based on the output, write out the regression equation for predicting family income. 9. Using the regression equation, what is the predicted monthly family income for women working 35 hours per week? 10. Using the regression equation, what is the predicted monthly family income for women working 20 hours per week? Multiple Regression Assignment: In this assignment we are trying to predict CES-D score (depression) in women. The research question is: How well do age, educational attainment, employment, abuse, and poor health predict depression? Using Polit2SetC data set, run a multiple regression using CES-D Score (cesd) as the outcome variable (Y) and respondent’s age (age), educational attainment (educatn), currently employed (worknow), number, types of abuse (nabuse), and poor health (poorhlth) as the independent variables (X). When conducting any regression analysis, the dependent (outcome) variables is always (Y) and is placed on the y-axis, and the independent (predictor) variable is always (X) and is placed on the x-axis. Follow these steps when using SPSS: 1. Open Polit2SetC data set. 2. Click on Analyze, then click on Regression, then Linear. 3. Move the dependent variable, CES-D Score (cesd) into the box labeled “Dependent” by clicking on the arrow button. The dependent variable is a continuous variable. 4. Move the independent variables (age, educatn, worknow, and poorhlth) into the box labeled “Independent.” This is the first block of variables to be entered into the analysis (block 1 of 1). Click on the bottom (top right of independent box), marked “Next”; this will give you another box to enter the next block of indepdent variables (block 2 of 2). Here you are to enter (nabuse). Note: Be sure the Method box states “Enter”. 5. Click on the Statistics button (right side of box) and click on Descriptives, Estimates, Confidence Interval (should be 95%), R square change, and Model Fit, and then click on Continue. 6. Click on OK. 7. Check your SPSS output. Assignment: (When answering all questions, use the data on the coefficients panel from Model 2). 1. Analyze the data from the SPSS output and write a paragraph summarizing the findings. (Use the example in the SPSS output file as a guide for your write-up.) 2. Which of the predictors were significant predictors in the model? 3. Which of the predictors was the most relevant predictor in the model? 4. Interpret the unstandardized coefficents for educational attainment and poor health. 5. If you wanted to predict a woman’s current CES-D score based on the analysis, what would the unstandardized regression equation be? Include unstandardized coefficients in the equation.

 

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