Table of contents

- Warm-up with RBC Model
- Endogenous Grid Method
- Stationary Equilibrium
- Perfect-Foresight Transitions
- Sequence-Space Methods
- Heterogeneous Agent New Keynesian Model

These notes provide a crash course on solving heterogeneous-agent macro models. As a warm up, we will solve a simple representative-agent RBC model. We then turn to a partial equilibrium consumption-savings problem to introduce the endogenous grid method for solving such problems. We then solve for a stationary equilibrium as in the Aiyagari (1994) model for which we will discuss non-stochastic simulation techniques. It is relatively straightforward to add perfect-foresight transitions to a simple model like Aiygari (1994). However, in more complicated models we will find it useful to use richer sequence-space methods. Finally, we use these ideas to solve a heterogeneous agent New Keynesian Model.

These notes will present the ideas without getting too deep into the code that implements them. The methods are implemented by a set of of Julia programs, which are described throughout the notes.

These notes were heavily updated in the Summer of 2024. The previous version is available here.