Analyzing the Impact of Representative Agent Assumptions on DSGE Models
This was my project in Mario Solis-Garcia’s Macroeconomic Modeling class (Econ 472) in Spring 2024.
For the project, I was interested in how representative agent assumptions affect DSGE models. I created a New Keynesian model and analyzed how the economy responded to shocks to government spending, total factor productivity, and the interest rate. Mirroring other research in the topic, I found that the addition of individual heterogeneity to the model increased the volatility of the economy and enlarged the shorter-term effects of the shock.
More generally, this project acted as a precursor to my honors project in economics where I work with a HANK model. During the project, I implemented Rendahl’s Linear Time Iteration to solve the model, which guided my interest in using computational modeling to analyze real world phenomena.