Macroeconomics of Monetary and Fiscal Policy

Vital equations for Mid-term 2

Aggregate feasibility

Per-young feasibility

Real money balances

Aggregate demand for money

Market clearing condition

Equilibrium price level

Government budget constraint (seigniorage)

Equilibrium inflation rate

leisure model young BC

leisure model old BC

leisure model lifetime BC

substitution effect

consumption increases, leisure decreases, labor supply increases

income effect

consumption increases, leisure increases, labor supply decreases

lump sum tax young BC

lump sum tax old BC

lump sum tax LBC

seigniorage young BC

seigniorage old BC

seigniorage LBC