Questions from Macroeconomics

Q: (a) Convergence. Let yi denote log output per worker

(a) Convergence. Let yi denote log output per worker in country i. Suppose all countrieshavethesamebalanced-growth-pathleveloflogincomeperworker, y∗. Suppose also that yi evolves according to dyi(t)/d...

Q: Consider the situation described in Problem 12.19. Find the

Consider the situation described in Problem 12.19. Find the parameter values (if any) for which each of the following is an equilibrium: (a) One-period punishment. πe t equals ˆ π if πt−1 = πe t−1 and...

Q: Consider the following model of income determination. (1) Consumption

Consider the following model of income determination. (1) Consumption depends on the previous period’s income: Ct =a+bYt−1. (2) The desired capital stock (or inventory stock) is proportional to the pr...

Q: Consider the situation analyzed in Problem 12.19, but assume

Consider the situation analyzed in Problem 12.19, but assume that there is only some finite number of periods rather than an infinite number. What is the unique equilibrium? Data from Problem 12.19:...

Q: Suppose the relationship between unemployment and inflation is described by πt =

Suppose the relationship between unemployment and inflation is described by πt =πt−1−α(ut − un ) + εS t , α>0, where the εS t ’s are i.i.d., mean-zero disturbances with cumulative distribution functio...

Q: Suppose the relationship between output and inflation is given by yt =

Suppose the relationship between output and inflation is given by yt = yn +b(πt −Et−1πt), where b >0 and where Et−1 denotes the expectation as of period t−1. Suppose there are two types of politicians...

Q: Suppose that money demand is given by ln(M/P

Suppose that money demand is given by ln(M/P) = a −bi+ lnY, and that Y is growing at rate gY. What rate of inflation leads to the highest path of seignorage?

Q: Suppose that instead of adjusting their real money holdings gradually toward the

Suppose that instead of adjusting their real money holdings gradually toward the desired level, individuals adjust their expectation of inflation gradually toward actual inflation. Thus equations (12....

Q: Suppose you want to test the hypothesis that the real interest rate

Suppose you want to test the hypothesis that the real interest rate is constant, so that all changes in the nominal interest rate reflect changes in expected inflation. Thus your hypothesis is it =r +...

Q: Suppose that aggregate supply is given by the Lucas supply curve,

Suppose that aggregate supply is given by the Lucas supply curve, yt = yn+b(πt−πe t ),b > 0,andsupposethatmonetarypolicyisdetermined by mt =mt−1+a+εt, where ε is a white-noise disturbance. Assume that...