Diamond and the Ramsey growth models
Discuss the assumptions and the growth mechanism of these models.
Although these models have identical market structures, the efficiency
properties of the equilibrium differ substantially.
Discuss the household preferences; for example, OLG structure in the Diamond model and pure altruism in the Ramsey.
State and, if possible, solve the optimal decision of agents -households and firms.
Explain in detail the market structure – remember the two diagrams, we discussed during the lecture, that explained the links between households, firms, and aggregate investment.
characterise the dynamics around the steady state – note: for Ramsey, simply characterise the steady state and discuss
What is happening to consumption dynamics when the interest rate is above, equal or below the subjective discount rate
Of course, characterising properly the dynamics in the Ramsey model, using the diagrams we discussed, will certainly be considered an excellent answer!