{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

lec08_01

# lec08_01 - ECON 4721H Money and Banking Lecture 08_01...

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

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

View Full Document

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

View Full Document

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

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ECON 4721H Money and Banking Lecture 08_01 Satoshi Tanaka University of Minnesota November 14, 2011 Satoshi Tanaka ECON 4721H Money and Banking Lecture 08_01 Role of Central Bank I Model with In ation Satoshi Tanaka ECON 4721H Money and Banking Lecture 08_01 Today's Question Why does in ation matter? Should the central bank create in ation? Satoshi Tanaka ECON 4721H Money and Banking Lecture 08_01 Partial Answers In ation is bad for people. Why? However, it can be a source of government revenue : simply print money, and use it to purchase goods from the public. An extreme case of in ation: Germany in 1914-1924. Satoshi Tanaka ECON 4721H Money and Banking Lecture 08_01 OLG Model with In ation Consider the overlapping generation model where people live for two periods. Remember that we started out by assuming that the initial generation of old people received an endowment of money, m = ¯ m . Now, we're going to extend this assumption. Assume that every period the government print some amount of new money. 1 The government enters the money market (where old guys are selling money), and sell money to young guys for consumption. 2 The government gives the consumption to the old as a lump-sum transfer , a t + 1 ....
View Full Document

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern