Hanbaek Lee

🚨 New working paper: 🕺 Dancing on the Saddles 1/ Solow and Ramsey-Cass-Koopmans gave us phase diagrams to visualize growth dynamics. But we lack a systematic counterpart for stochastic environments. I extend saddle-path analysis by introducing "conditional saddle paths."

@FlorinBilbiie Thanks so much, @FlorinBilbiie!

My brilliant Cambridge colleague @HanbaekLee has this wonderful paper on extending saddle-path methods to stochastic environments. (I missed it when he posted a few weeks ago but remembered the project in a discussion with students today).

What is the stochastic counterpart to the Solow/Ramsey phase diagram? NEW WP by @HanbaekLee @CamEcon : “conditional saddle paths” give a geometric characterization of aggregate fluctuations and explain why K works in Krusell–Smith. ➡️econ.cam.ac.uk/publications/c… #econtwitter

Thanks, Pontus! @pontus_rendahl Yes, very related. Your work derives an aggregate LoM from structure in individual policy rules (linearity in k ⇒ a parametric aggregate mapping / AR-type LoM for K). In my language, that’s the kind of setup that makes the conditional saddle path extra tractable and can push the regime-to-regime “gap” toward being close to state-independent (i.e., the geometry becomes close to a translation/parallel shift).

@HanbaekLee Cool Hanbaek! I have a paper with Wouter where we say that IF individual policy functions are linear in k, then aggregate K is also linear with respect to its own lag. We then derive the latter LoM from the former. Could it be related?

🚨 New working paper: 🕺 Dancing on the Saddles 1/ Solow and Ramsey-Cass-Koopmans gave us phase diagrams to visualize growth dynamics. But we lack a systematic counterpart for stochastic environments. I extend saddle-path analysis by introducing "conditional saddle paths."

@YuchengYang1993 Many thanks @YuchengYang1993! Our discussion was extremely helpful. Hope we can catch up again soon!

@HanbaekLee Great to see the draft out! Excited to read the details :)

@aledinola Thank you @aledinola!

@HanbaekLee Great paper!!

@AlePeri83 Thank you, Alessandro! @AlePeri83

@HanbaekLee This is really impressive work, Hanbaek. Well done!!!

@J_Meanwell Thank you @J_Meanwell!

@HanbaekLee Very very cool, Hanbaek!

7/ 📄 hanbaeklee.github.io/Webpage/Lee_Sa… The framework extends to bonds, endogenous labor (GHH), and more. Would love to hear your thoughts!

6/ Why does it work? The conditional K-nullcline remains sign-determining in KS1998, just as in a simple RBC. The geometric structure guarantees monotone convergence → K uniquely indexes equilibrium states.

The Nobel Laureate Professor Philippe Aghion gave the Alfred Marshall Lectures on the theme of “Rethinking Capitalism: The Power of Creative Destruction” at the Faculty. If you missed it, we now have video of this significant event in Lady Mitchell Hall: econ.cam.ac.uk/news/2025/nobe…

In his #JMP, Faculty #JMC Charles Parry develops and estimates an equilibrium model of the VC market to study start-up innovation and survival, the sectoral allocation of funding, and the drivers of cross-country differences in start-up activity. sites.google.com/view/charles-p…

In her JMP, #JMC Deniz Atalar shows, using a model and Turkish firm data, the welfare costs of trade barriers depend on whether they spur or stifle innovation. In Turkey a 10% rise in trade barriers spurs innovation, cutting welfare losses by a quarter. denizatalar.com

The Faculty of Economics is pleased to announce its 2025 Job Market Candidates. A complete list of the JMCs can be found here: econ.cam.ac.uk/people/job-mar… Over the next few days, we will introduce each of them with a tweet on their JMP, plus details of their career and research.

Amazing Marshall Lecture by @ProfAghion. Really inspirational and very broad and key topics. And amazing dinner discussion.

Another wonderful lecture by @ProfAghion! Continuation of the Marshall Lecture. Today it was about whether we should fear AI. And such a vivid mind. Inspirational