This preview shows page 1. Sign up to view the full content.
Unformatted text preview: Y , with ( Y ) = c 1 + c 2 Y . Aggregate demand takes the form D ( p , L ) and in equilibrium is equal to supply, i.e., D [ p , ( Y )] = Y . inally, we have both a price and a quantity adjustment: p = [ D ( p , ( Y )) Y ] > Y = [ p ( Y )] > (4.29) These establish two differential equations in p and Y . Consider the following numerical example. Let ( Y ) = . 87 + . 5 Y D ( p ) = . 02 p 3 + . 8 p 2 9 p + 50 then ( p , Y ) = (13 , 24 . 26) with isoclines: p = Y = . 02 p 3 + . 8 p 2 9 p + 50 Y = p = . 87 + . 5 Y or Y = 1 . 74 + 2 p igure 4.31 reproduces the Fgures derived in laschel et al. 1997 using Mathematica , for = 1 and different values of the parameter . Not only do the Fgures...
View
Full
Document
This note was uploaded on 12/14/2011 for the course ECO 3023 taught by Professor Dr.gwartney during the Fall '11 term at FSU.
 Fall '11
 Dr.Gwartney
 Economics

Click to edit the document details