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Lectures on Non-CES Demand Systems and Their Applications (ECO-AD-DEMANDSYS)

ECO-AD-DEMANDSYS

Description

Overview:

CES and nested CES demand systems are popular modeling tools that are widely used in business cycles theory,
macroeconomic growth and development, international trade and other general equilibrium fields, because it has many knife-edge
properties, which help to keep the analysis tractable in the presence of many goods and factors. However, this also makes it hard to tell
which properties of CES are responsible for certain results. Moreover, it is necessary to relax some of them for certain applications. I
review several classes of non-CES aggregators, each of which removes some properties of CES and keeps the rest to introduce some
flexibility while retaining the tractability of CES as much as possible. I explain how these classes are related to each other and discuss
their relative strengths and weaknesses to indicate which classes are suited for which applications.
(Preliminary) Plan: Even though these lectures follow materials in a logical sequence, I’ll do my best to make them self-contained so
that one could take them independently. * are essential readings; they are the review articles I wrote for the teaching purpose.

Lecture 1: Nonhomothetic Demand Systems: An Overview
*Matsuyama, “Non-CES Aggregators: A Guided Tour,” Annual Review of Economics, 2023. Sections 1-4.
Lecture 2: Nonhomothetic CES: Applications to Structural Transformation
Comin-Lashkari-Mestieri, “Structural Transformation with long-run Income and Price effects,” Econometrica 2021
Fujiwara-Matsuyama, “A Technology-Gap Model of ‘Premature’ Deindustrialization,” CEPR-DP15530-4. Forthcoming in AER.
Matsuyama, “Engel's Law in the Global Economy,” Econometrica, 2019.
Oberfield, “Inequality and Measured Growth,” 2023.
Lecture 3: Homothetic non-CES Demand Systems: An Overview
*Matsuyama, “Non-CES Aggregators: A Guided Tour,” Annual Review of Economics, 2023. Sections 5-9.
Matsuyama-Ushchev, “Love-for-Variety” CEPR-DP#18184.
Lecture 4: Homothetic non-CES Demand Systems with Applications to Monopolistic Competition: Homogenous Firms
*Matsuyama, “Homothetic non-CES Demand Systems with Applications to Monopolistic Competition,” CEPR DP#19376 Sections 1-6.
Dixit-Stiglitz, “Monopolistic Competition and Optimal Product Diversity,” American Economic Review, 1977.
Matsuyama-Ushchev, “When does procompetitive entry imply excessive entry?” CEPR-DP#14991.
Fujiwara-Matsuyama, “Competition and the Phillips Curve,” CEPR-DP#17521-3.
Lecture 5: Homothetic non-CES Demand Systems with Applications to Monopolistic Competition: Heterogeneous Firms
*Matsuyama, “Homothetic non-CES Demand Systems with Applications to Monopolistic Competition,” CEPR DP#19376 Sections 7-8.
Matsuyama-Ushchev, “Constant Pass-Through,” CEPR-DP#15475.
Melitz, “The Impact of Trade on Intra-Industry Reallocations, and Aggregate Industry Productivity,” Economtrica, 2003.
Baqaee-Fahri-Sangani, “Supply-Side Effects of Monetary Policy,” Journal of Political Economy, forthcoming
Baqaee-Fahri-Sangani, “The Darwinian Returns to Scale,” Review of Economic Studies forthcoming.
Matsuyama-Ushchev, “Selection & Sorting of Heterogenous Firms through Competitive Pressures” CEPR-DP#17092-2.
Grossman-Helpman-Lhuillier, “Supply Chain Resilience” Journal of Political Economy, forthcoming
Matsuyama-Ushchev “Destabilizing Effects of Market Size in the Dynamics of Innovation,” J. Econ Theory 2022.
Matsuyama-Ushchev “Destabilizing Effects of Market Size in the Dynamics of Innovation: Judd meets Kimball.”
Additional Materials: Nonhomothetic non-CES Demand Systems: Applications to Monopolistic Competition
Parenti-Ushchev-Thisse, “Toward a Theory of Monopolistic Competition,” Journal of Economic Theory 2017.
Thisse-Ushchev, “Monopolistic Competition Without Apology,” Hdbk of Game Theory & Industrial Organization
Melitz-Ottaviano, “Market Size, Trade and Productivity,” Review of Economic Studies 2008
Boucekkine-Latzer-Parenti, “Variable mark-up in the Long Run,” Journal of Mathematical Economics
Latzer-Matsuyama-Parenti, “Reconsidering the Market Size Effect on Innovation and Growth,” CEPR-DP#14250
Matsuyama-Ushchev “Destabilizing Effects of Market Size in the Dynamics of Innovation: Population Size vs. Per Capita Income.
Evaluation:
Class Attendance (25%); Class Participation (25%)
A Short Research Proposal (50%), which proposes potential applications of one or more non-CES demand systems discussed in these
lectures.

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