1. Production, Growth And Business Cycles By Robert G. King, Charles I. Plosser and Sergio T. Rebelo Presented By Erik Grothman, John Hudson and Nate Drunasky

2. Introduction Neoclassical Model First Order Conditions Approximation Method Calibration Table Dynamics with Graphs

3. Neoclassical Model Preferences – β = Discount Rate – C = Consumption – L = Leisure Production Possibilities – K = Capital Stock – N = Labor input – X = Technological Variations – A = Changes in Total Productivity

4. Continued… Capital Accumulation – I = Gross Investment – = Rate of Depreciation of Capital Resource Constraints – Total time allocated to work and leisure must not exceed the endowment – Total uses of the commodity must not exceed output

5. Optimization Problem Lagrangian Theorem – Y-C-I – Y= GDP, C= Consumption, and I= Investments

6. First Order Conditions

7. Approximation Method Approximation of the intertemporal efficiency condition implies that: – = Shadow Price – = Technology Shifts

8. Approximation Method

9. Linearize Equations Since you cannot derive the previous equations they try to linearize the lines by using the equations below

10. Calibration Model

11. Dynamics