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"Literally the first macroeconomic models you learn in grad school have savings. " Go look it up in MankiW. You'll find those aren't financial savings. Money
by neilwilson 6y ago
"Literally the first macroeconomic models you learn in grad school have savings. "
Go look it up in MankiW. You'll find those aren't financial savings.
Money plays no part in RBC models. It's a one-to-one match with stuff.
- huitzitziltzin 6y agoThe models we teach to undergrads in macro principles are simpler than the models economics professors use in their research or that central banks use to make policy. Mankiw does not have a graduate textbook so I'm not sure where you want me to look it up. The math textbooks used in middle school don't cover calculus. Same thing w/ the economics textbooks: undergrad textbooks cover simplified versions of problems. If you want to see money in a macro model in the RBC tradition, see Thomas Sargent and Lars Ljungvist's "Recursive Macroeconomic Theory" (the standard graduate textbook everywhere) Part IV. For asset pricing, see the same book in Chapters 13 and 14. IF you want to see savings, you can start much earlier in the book, probably around chapter 8 or 9. For another example of money in an RBC model, see the very-well titled "ABC's of RBC's" by McCandless, Section 2. I am not sure where you get your confidence that this very basic feature of actual economies is ignored in economic modeling? It is misplaced.