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ECO3020F tutorial 11
- Course
- ECO3020F (ECO3020)
- Institution
- University Of Cape Town (UCT)
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New Keynesian modelprices are sticky observed market price market clearingprice
same for wages and real interest rate
to stabalize price and real interest rate at th
Monetary policymight try
rates
non market
clearing
picks the wrong M demand is too low an
at r and p in the goods market r is too high
YIIYafurtiiiiue.itPity Pm then w and n are too low
he equilibrium point wheremarue
EYEbye stfu Pngm ffe8mhyEpwen
is not neutral as P pm
monetary policy policy can have real effects on business cycles
both fiscalandmonetary
Real Business Cycle Model
TfP shocks
54 8 4 588ft a
are flexible and adjust quickly
to
assumes prices and wages
changes markets work efficiently
left to adjust on its own
economy better intervention
there is no need for government
in the williamson model actual level
km equilibrium level
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