Brian Romanchuk — The Curious Household Accounting Of DSGE Models [part 2 of 3]

Summary:
This article is the second part (of a planned trilogy) of articles on the accounting issues within Dynamic Stochastic General Equilibrium (DSGE) models. I have deliberately chosen one of the simplest DSGE models I could find, a deterministic (non-random) Ramsey model from the text Recursive Macroeconomic Theory by Lars Ljungqvist and Thomas J. Sargent. I have the third edition; the text is referred to as [LS2012] herein. My previous article, "The Curious Profit Accounting of DSGE Models," described the relationships for the business sector. This model has three sectors, and yes, the third article will likely be titled "The Curious Government Accounting of DSGE Models." That is, I see issues with all three sectors; the macroeconomic accounting identities tell us if we have a problem with

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