## Macro 2 - Tepper School of Business

**Lecture Notes:**

- Part 1: McCall search and DMP - [
__PDF__] - Part 2: Postel-Vinay and Robin - [
__PDF__] - Part 3: Income fluctuation problem and incomplete markets - see Chapters 16 and 17 of Sargent and Ljungqvist - Note on proof of boundedness of assets in Ayagari's model - [
__PDF__]

**Lectures:**

- Lecture 1:
- We discussed McCall's model of search. For a version where the searcher does not know the distribution of outcomes (wages, prices, etc.) see
__Rothschild (1974)__ - Discussed Rotschild's critique and Diamond's paradox

- We discussed McCall's model of search. For a version where the searcher does not know the distribution of outcomes (wages, prices, etc.) see
- Lecture 2:
- Briefly discussed Stigler's version of search which is non-sequential. As De Los Antos, Hortacsu, and Wildenbeest - paper
__here__- show using data on consumers' online search, consumers do go back to examined item, i.e., they do not buy the last item visited which is what sequential search model a la McCall would prescribe. - Worked on the plain-vanilla version of the Diamond-Mortensen-Pissarides model and discussed its efficiency properties and the Hosios condition

- Briefly discussed Stigler's version of search which is non-sequential. As De Los Antos, Hortacsu, and Wildenbeest - paper
- Lecture 3:
- Lecture 4:
- Started working on the Income Fluctuation Problem
- Studied the case with quadratic utility function and showed the it leads to Permanent Income Hypothesis (PIH)

- Lecture 5:
- Showed that assets converge to infinity in the income fluctuations problem
- Started looking at the Ayagari's model

- Lecture 6:
- Discussed Ayagari/Huggett model in SS, transitions and with shocks

- Discussed Ayagari/Huggett model in SS, transitions and with shocks
- Lecture 7:
- Worked on an endogenous incomplete market model in the spirit of Kehoe-Levine, Kocherlakota and Alvarez-Jermann.

- Worked on an endogenous incomplete market model in the spirit of Kehoe-Levine, Kocherlakota and Alvarez-Jermann.