The Dynamic Macroeconomic Model with Money
How the dynamic macroeconomic theory expands with money
This document introduces money into our economy, creating a “Cash-In-Advance” transaction constraint, banks, money as a medium of exchange and credit facilities. First I introduce the credit market and then use this to derive the Money Demand equation. The link between money and credit is the nominal interest rate. After examining the money market, I introduce the concept of money neutrality, and super-neutrality. Finally I show the effects of a one-off, unexpected and permanent increase in the money supply, a growth of the money supply, and The Friedman Rule for controlling inflation.Download PDF File
We’re Here To help
We know our tutors personally, meaning we can find the perfect tutor for you.