cheat_sheet_midterm2_v1

# cheat_sheet_midterm2_v1 - k k where y = Y L and k = K L...

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BUAD 350 Macroeconomics Analysis for Business Decisions Fall 2010 GDP accounting expression Y = C + I + G + NX Growth rate of a variable: X 1 - X 0 X 0 or X 1 X 0 - 1 the slope of the function y = f ( x ) is deﬁned as Δ y Δ x Rules regarding exponents ( ab ) c = a c b c and a b a c = a b + c If the production function is Y = K a L b the marginal products are MPK = aK a - 1 L b and MPL = bK a L b - 1 Firms maximize Π = PY - WL - RK Intertemporal budget constraint C 1 + C 2 1 + r = Y 1 + Y 2 1 + r Cost of Capital CoC = iP k - Δ P k + dP k = uc = r + d Marginal tax rate for ﬁrms proﬁts, implies that MPK = 1 1 - τ f R P = r + d 1 - τ f

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Investment I d = K d - (1 - d ) K 0 If the production function is Y = AK a K L a L , the growth accounting equation is Δ Y Y = Δ A A + a K Δ K K + a L Δ L L Growth accounting per capita: Δ y y = Δ A A + a K
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Unformatted text preview: k k where y = Y L and k = K L Solow Growth Model Assumptions * Y t = C t + S t and S t = sY t * K t +1 = (1-d-n ) K t + I t * Evolution of L and A : L t +1 = (1 + n ) L t , and A t +1 = A t (1 + ) * y t = Af ( k t ) Steady State * sy * = ( d + n ) k * * c * = (1-s ) y * Demand for Money M d = PL ( i,Y ) = L ( r + e ,Y ) Money Growth and ination P P = M M- Y Y Y- r r r Quantity Theory of Money MV = PY = M M + V V = P P + Y Y...
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## cheat_sheet_midterm2_v1 - k k where y = Y L and k = K L...

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