Q: Consider the Alesina Drazen model. Describe how, if at all
Consider the Alesina Drazen model. Describe how, if at all, each of the following developments affects workers’ proposal and the probability of reform: (a) A fall in T. (b) A rise in B. (c) An equal r...
See AnswerQ: Consider the model in Section 13.7. Suppose, however
Consider the model in Section 13.7. Suppose, however, that if there is no reform, workers and capitalists both receive payoffs of −C rather than 0, where C ≥0. (a) Find expressions analogous to (13.37...
See AnswerQ: Consider the model in Section 13.6. Suppose an international
Consider the model in Section 13.6. Suppose an international agency offers to give the workers and capitalists each an amount F > 0 if they agree to reform. Use analysis like that in Problem 13.12 to...
See AnswerQ: Suppose that in the Shapiro Stiglitz model, unemployed workers are hired
Suppose that in the Shapiro Stiglitz model, unemployed workers are hired according to how long they have been unemployed rather than at random; specifically, suppose that workers who have been unemplo...
See AnswerQ: Suppose the economy consists of M >1 congressional districts. The
Suppose the economy consists of M >1 congressional districts. The utility of the representative person living in district i is E +V(Gi)− C (T ). E is the endowment, Gi is the level of a local public g...
See AnswerQ: Consider the same setup as in Problem 13.14. Suppose
Consider the same setup as in Problem 13.14. Suppose, however, that there is an initial level of debt, D. The government budget constraint is therefore D +M i=1 Gi = MT. (a) How does an increase in D...
See AnswerQ: Consider the model of crises in Section 13.9, and
Consider the model of crises in Section 13.9, and suppose T is distributed uniformly on some interval [μ−X,μ+X], where X > 0 and μ−X ≥0. Describe how, if at all, each of the following developments aff...
See AnswerQ: By definition, the budget deficit equals the rate of change of
By definition, the budget deficit equals the rate of change of the amount of debt outstanding: δ(t)≡ D(t). Define d(t) to be the ratio of debt to output: d(t) ≡ D(t)/Y(t). Assume that Y(t) grows at a...
See AnswerQ: Consider an individual who lives for two periods. The individual has
Consider an individual who lives for two periods. The individual has no initial wealth and earns labor incomes of amounts Y1 and Y2 in the two periods. Y1 is known, but Y2 is random; assume for simpli...
See AnswerQ: Consider the Barro tax-smoothing model. Suppose that output,
Consider the Barro tax-smoothing model. Suppose that output, Y, and the real interest rate, r, are constant, and that the level of government debt outstanding at time 0 is zero. Suppose that there wil...
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