equations - Y/Y=sA-d Money demand M^d/P=L(Y,r+ ) Velocity...

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Fundamental Identity of Nat’l Inc Acct Total Prod.=Total Inc=Total Expen Income-Exp. Identity Y=C+I+G+NX Private Savings Spriv=(Y+NFP-T+TR+INT)-C Government Savings Sgovt=(T-TR-INT)-G National Savings S=Spriv+Sgovt=Y+NFP-C-G National Savings S=I+CA Private Savings Spvt=I+(-Sgovt)+CA Expected Real Interest Rate r=i- π Production Function Y=AF(K,N) Full Employment Output Ybar=AF(K,Nbar) Okun’s Law (Ybar-Y)/Ybar=2(u-ubar) u=unemployment Okun’s Law growth rate Y/Y=3-2 u Desired National Saving S^d=Y-C^d-G Expected after-tax real interest rate r=(1-t)i- π User Cost of Capital uc=rpk+dpk=(r+d)pk Desired Capital Stock MPK^f=uc/(1-t)=(r+d)pk/(1-t) Goods Market Equilibrium Condition Y=C^d+I^d+G Goods Market Equilibrium Condition S^d=I^d Growth Accounting Equation Y/Y= A/A+ak K/K+an N/N Per worker production function y=f(k) Steady state consumption per worker c=f(k)-(n+d)k Steady state sf(k)=(n+d)k Endogenous growth Y=AK Endogenous growth model
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Unformatted text preview: Y/Y=sA-d Money demand M^d/P=L(Y,r+ ) Velocity V=nominal GDP/nominal money stock=PY/M Asset Market Equilibrium Condition M/P=L(Y,r+ ) Inflation Rate = M/M- y Y/Y y=Income elasticity of money demand Short-run aggregate supply curve Y=Ybar+b(P-P^e) Expectations-augmented Phillips curve = ^e-h(u-ubar) Money Supply M=sum of currency held by the non-public bank +public bank deposits M=CU+DEP Monetary Base BASE=CU+Bank Reserves Money Supply M=((cu+1)/(cu+res)) BASE B=nominal government budget deficit Change in debt-GDP ratio Deficit/nominal GDP-((total debt/nominalGDP) xgrowth rate of nom GDP) B=Government debt outstanding; B^p=government debt held by public; B^cp=government debt held by central bank Deficit= B= B^p+ B^cb= B^p+ M Real seignorage revenue R= M/P= (M/P)...
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