Unformatted text preview: (Department of Economics UTM) Monetary Intertemporal Model 2013/Jan 2/7 Representative Consumer
Demands goods for consumption: C d depends on we (+) and
Supplies labour: N s depends on w (+) and r (+)
Pays lump-sum taxes
Demands money to make some (or all) purchases, and money must
be held for a while before it is spent (cash-in-advance constraint)
M d = PL (Y , R ) = PL (Y , r + i )
The demand for money increases with the price level P and the
quantity of goods to be purchased (measured by Y ) and falls with the
- when Y increases, Md increases
opportunity cost of holding money R . - when...
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This document was uploaded on 02/07/2014.
- Spring '14