Matthias Doepke - Marcroeconomics - Chapter 9 doc

... entire post-war history of the United States and the Western European countries there is not a single depression that caused an output loss similar to the one suf- fered between 192 9 and 193 3. The ... Section 9. 2 we will concen- trate on the real business cycle model, which is a straightforward extension of the market- clearing models that we developed in earlier chapters. Section 9. 3 p...

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... to compute the growth rates in the CPI in the four quarters starting in March 199 6 (i.e, Mar-Jun 199 6, Jun-Sep 199 6, etc.). (Use a continuous growth rate but do not annualize your answer.) Show ... after years under continuous compound- ing 0 Initial value of the investment Table 1.1: Notation for Chapter 1 Year Mar Jun Sep Dec 199 6 155.7 156.7 157.8 158.6 199 7 160.0 160.3 161.2 161....

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... . 0 0.2 0.4 0.6 0.8 1 0 0.2 0.4 0.6 0.8 1 0 0.2 0.4 0.6 0.8 1 product (y) labor (l) capital (k) Figure 2.1: Cobb-Douglas Production We will not be dealing with capital until Chapter 9, so for now we assume that capital is fixed,say,at = 1. This ... problems of constrain- ed maximization when it is either difficult or impossible to solve the constraints for indi- vidual variables. At first we...

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... of poll taxes. The most recent use of poll taxes was in England, where they were used from 199 0-1 99 3 to finance local governments. Each council (roughly equivalent to a county) divided its expenditure ... 0.7 0.8 0 .9 1 0 0.05 0.1 0.15 0.2 0.25 Tax revenue when γ=0.5 τ T(τ) Figure 13.1: A government revenue func- tion that exhibits a Laffer curve. A Lump-sum Tax Now let us introduce a...

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... interest rate in- creases. That means that the right-hand side increases, so the left-hand side must increase in order to maintain the equality. There are two ways that the left-hand side can ... equation (6.3) gives us: = 1 1 = 1+ 1 1 1 = 1+ Chapter 6 The Labor Market This chapter works out the details of two separate models. Section 6.1 contains a one- period model in which households a...

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... second-period income increases, then does too. Conversely, if second-period in- come decreases, then does too. This makes intuitive sense. If 2 goes down, households will try to invest first-period ... (3.4 )-( 3.6); Given these choices of , the goods market clears in each period, as given in equa- tion (3.10); and Given these choices of 1 , the bond market clears, as given in equation (3 .9...

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... one market-clearing constraint is redundant. This means that if each consumer’s budget constraint is satisfied and all but one market-clearing con- ditions hold, then the last market-clearing ... pure-exchange economy, assume that the bud- get constraints for each of the consumers and the market-clearing constraints for the first 1 goods are satisfied. We want to show that the last market-cleari...

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... monetary pol- icy. While the prime emphasis of the cash-in-advance model is the inefficiency of holding cash instead of interest-bearing assets, Chapter 19 turns to the issue of expected versus un- expected ... un- expected inflation. You can think of the cash-in-advance model as describing the long-run consequences of expected inflation, while Chapter 19 considers the short-run consequenc...

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... production function equa- tion (11.1) exhibits constant returns to scale, which means that if we double both inputs, output also doubles. Our choice of a constant-returns-to-scale production function ... the basis of many more-advanced models in macroeconomics. For example, our real business cycle model of Chapter 9 is a Solow model enriched by optimizing consumers and pro- ductivity shoc...

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... war steady-state, but the relatively short duration of the war prevents it from ever reaching that steady-state. After the war the econ- omy transitions slowly back to its pre-war steady-state. ... fully discuss tax policy, for this chapter we will assume that the gov- ernment levies a very special kind of tax: a lump-sum tax. That is, the government an- nounces a spending plan and then ......

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