Q: Consider a continuous-time version of the Mankiw Reis model.
Consider a continuous-time version of the Mankiw Reis model. Opportunities to review pricing policies follow a Poisson process with arrival rate α>0. Thus the probability that a price path set at time...
See AnswerQ: Consider the analysis of the new Keynesian Phillips curve with indexation in
Consider the analysis of the new Keynesian Phillips curve with indexation in Section 7.7. Suppose, however, that the indexation is only partial. That is, if a firm does not have an opportunity to revi...
See AnswerQ: Suppose the economy is described by the model of Section 7.
Suppose the economy is described by the model of Section 7.2, except that instead of half of firms setting their prices each period, fraction f set their prices in odd periods and fraction 1− f set th...
See AnswerQ: (a) Consider the model in equations (6.29
(a) Consider the model in equations (6.29) (6.32). Solve the model using the method of undetermined coefficients. That is, conjecture that the solution takes the form yt =AuIS t , and find the value t...
See AnswerQ: Consider the model in equations(6.29) (6
Consider the model in equations(6.29) (6.32).Suppose, however, there are shocks to the MP equation but not the I Sequation. Thus rt =byt+uMP t ,uMP t = ρMPuMP t−1+e MP t (where −1
See AnswerQ: Consider the following model. The dynamics of inflation are given by
Consider the following model. The dynamics of inflation are given by the continuous-time version of (6.23) (6.24): π(t) = λ[y(t)− y(t)], λ>0. The IS curve takes the traditional form, y(t) =− [i(t) − π...
See AnswerQ: Suppose the economy is described by two equations. The first is
Suppose the economy is described by two equations. The first is the IS equation, which for simplicity we assume takes the traditional form, Yt =−rt/θ. The second is the money-market equilibrium condit...
See AnswerQ: Let gt be growth of output per worker in period tπt inflation
Let gt be growth of output per worker in period tπt inflation, and πW t wage inflation. Suppose that initially g is constant and equal to gL and that unemployment is at the level that causes inflation...
See AnswerQ: The analysis of Case 1 in Section 6.2 assumes that
The analysis of Case 1 in Section 6.2 assumes that employment is determined by labor demand. Under perfect competition, however, employment at a given real wage will equal the minimum of demand and su...
See AnswerQ: Consider the following variant of the model in equations (11.
Consider the following variant of the model in equations (11.39) (11.42). The firm’s profits are π = AF(LI +LO)−wI LI −wOLO, where LI and LO are the numbers of insiders and outsiders the firm hires, a...
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