Dr. Greg Mankiw and the young Dr. Matthew C. Weinzierl, have brought to light a paper (white paper) entitled: " An Exploration of Optimal Stabilization Policy ."
This paper attempts to analyze an optimal monetary and fiscal policy in a large economy declining in wealth and aggregate demand.
The model used is the classic DSGE (Dynamic Stochastic General Equilibrium), although both Dr. Mankiw and his co-author Dr. Weinzierl, indicate that there is precisely a stochastic approach, but follows the tradition of the model, unlike the DSGE modelistic trend, reaching complex relationships between variables, Mankiw and Weinzierl looking to simplify the technical details to make the model more comprehensive.
http://www.dsge.net/
http://www.dsge.net/
While the paper is oriented towards the analysis of a developed economy, based its microfoundations in the definition of household income as follows:
max {u (C1) + v (G1) + B (u (C2) + v (G2))}
max {u (C1) + v (G1) + B (u (C2) + v (G2))}
typically C1 is the consumption of households G1 and government spending, discounting the factor B, for these same variables.
companies maximize their operations into two periods as follows: max {
P1H1 + (P2H2) / (1 + r)}
be P1, P2 prices and H corresponding period net profits of companies.
Very important is the production function, F (At, Kt) = AtKt; the AK type, remember that this model explains the growth factor is homogenous final good produced, such as physical capital and public capital (infrastructure).
Other relationships are:
Aggregate Demand:
Yt = Ct + It + Gt, where Yt is the income, consumption Ct, Gt It investment and government spending.
the monetary sector: Mt = z.Pt.Ct
, where z is the efficiency of the monetary system, M is the money supply. Then there
Fiscal Policy and its relations:
gt = (Gt / AtKt).
The document itself can be used as academic reading, for students in intermediate macroeconomics courses, allowing them to analyze the structure the operation of the balance, based on simple variables explained with proper expertise and co-author Greg Mankiw.
Here the link:
0 comments:
Post a Comment