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Unformatted text preview: s UTM) Monetary Intertemporal Model 2013/Jan 5/7 Equilibrium For the time being, expected future ináation (i ) is assumed to be
As in Real Intertemporal Model, the current labour and goods
markets determine Y and r
Current money market determines P Prof. Faig (Department of Economics UTM) Monetary Intertemporal Model 2013/Jan 6/7 Numerical Example
Expected future ináation: i = 0.02
Output and real interest rate (determined in current labour and goods
Y = 1100
r = 0.03 Y
1 + 2R
Supply of money: M s = 2000
Demand for money: M d = P Using R r + i , the aggregate price is determied by:
Ms = Md 2000 = P Prof. Faig (Department of Economics UTM) P 1100
1 + 2 (0.02 + 0.03) =2
Monetary Intertemporal Model 2013/Jan 7/7...
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This document was uploaded on 02/07/2014.
- Spring '14