Reply Wed 6 Jan, 2016 03:45 pm
I’m an older guy doing some adjunct work trying to get up to speed on the latest theories. The RBC theory is driving me bats! The RBC models seem extremely complex. I think I can get the basic point across to students with a much simpler model than the ones I’m coming across. But I’d appreciate the opinion of the group!
I think a model as simple as:
• C=Consumption
• L=Labor
• A= Technology
C=A*L Output is a function of technology and labor and all output is consumed. No savings, no capital. Super simple as I said. The agent produces as much as possible as efficiently as possible, which is entirely dependent on A and the exogenous labor force. Given L changes in C must be due to A. A is determined by random shocks!
Does this sum up the main point of RBC?
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