Additional_FiscalPolicy

Additional_FiscalPolicy - 1 t , tY T T P P < < + =...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
Government Budget Constraint G +iB – T = B + MB B = Nominal Stock of Government Debt i = Nominal Interest Rate T = Nominal Tax Receipts G = Nominal Government Expenditures MB = Monetary Base
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Pure Fiscal Policy G +rB – T = B No Change in the Monetary Base
Background image of page 2
Monetize the Debt G +rB – T = MB Fed Buys up the Debt Issued by the Treasury
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Full-Employment Deficit Tax Receipts:
Background image of page 4
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 6
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 1 t , tY T T P P < < + = Full-Employment Deficit-Surplus: T P- G P Bond Pricing Two Year Bond: ( 29 ( 29 2 2 B i 1 FV i 1 C i 1 C P + + + + + = PB = Bond Price C = Coupon Payment FV = Face Value i = Nominal Interest Rate How The Formula Arises A (1 + i) = A 1 A = A 1 /(1 + i) [A (1 + i)](1 + i) = A 2 A = A 2 /(1 + i) 2...
View Full Document

This note was uploaded on 04/14/2008 for the course ECON 102 taught by Professor Rossana during the Winter '08 term at University of Michigan.

Page1 / 6

Additional_FiscalPolicy - 1 t , tY T T P P < < + =...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online