ECON 5160 2011, April 5th
Annotated errata to the term paper problem set.
Please observe the following corrections The following corrects the term paper problem set:
- The u and v sequences are standard normal variables. You have to rescale them appropriately.
- There is no problem 3 (b). Keep the numbering.
- In problem 3, please change the matrix A by replacing the upper-right «4.5» entry by «2.5».
Also, it is the stationary variance that should be 3, not the stationary state. The stationary distribution is 2-dimensional and the marginal stationary distribution is the marginal of this simultaneous distribution.
Correction #3 applies to problem 4, as it refers to the matrix A from problem 3. This matrix should also have «2.5» instead of the «4.5».
- For corrections 1 and 2 above, we decided to provide you with simulated numbers rather than asking you to draw, but the last-minute changes were a bit too hasty.
- For problem 3, we copied Samuelson's model without realising it would diverge to infinity. The change into 2.5 means it will have a long-run steady-state. Thanks to Zongwei!