10-01-12-macromodel-revised (10) (1)

10-01-12-macromodel-revised (10) (1) -...

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

View Full Document Right Arrow Icon
Clearing Of The Labor Market Assuming That Wages Are Flexible, Then  Everyone Who Wants A Job At The  Prevailing Wage Can Obtain One. With Stable Loci For Demand And Supply  Of Labor, Output Is Stable For This Labor- Market-Clearing Economy. Ignoring The Interest-Rate Effect Which  Williamson Includes, Y s  = Y 0
Background image of page 1

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

View Full DocumentRight Arrow Icon
The Demand Structure Of A Simple  Closed Economy Looking At the Goods Market S + T – I – G = 0 S = -a + (1-b)·Y d – T = -170 + .4·Y d - T C = a + b·Y d = +170 + .6·Y d I = I 0 – h·r = 190 – 1000·r T = T 0 = 300 G = G 0 = 300
Background image of page 2
Specifics Of Variables S Is Saving, T Is Taxes, I Is Investment, G Is  Government Expenditures, Y d  Is Aggregate  Demand,  a Is The Intercept Term Of The Consumption  Function, b Is The Marginal Propensity To  Consume And Has A Value Between Zero And  One (That Is, It Has A Fractional Value).  h Is A  Parameter.  The Favorite Value For h Is 1000 I 0 , G 0 , And T 0  Are Exogenous Variables.   Favorite Values Are 190, 300, And 300  Respectively.
Background image of page 3

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

View Full DocumentRight Arrow Icon
The Supply Side Y s = Y 0 + e·r For Most Of Our Analysis We Will Assume That The Value Of The Parameter e Is Zero. (By Assuming That e Has A Value That Is Positive But Small, Williamson Makes His Diagrammatic Analysis Very Complicated.) Y s = Y d = Y = Y 0 Our Favorite Value For Y 0 Is 1500.
Background image of page 4
The Money Market m d = p + m d 0 + .001·Y – l ·r m s = m s T m s = m d More generally: m s = m s T + (d/(1-d))·(r – r T ) We will typically deal with the polar cases: Either d = 0, which represents the case where the Bank of Canada keeps the money
Background image of page 5

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

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

Page1 / 22

10-01-12-macromodel-revised (10) (1) -...

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