BSE3703 Econometrics for Business I Research Paper, NUS, Singapore Consider the standard OLG model of money Individuals are endowed with y units of the endowment good when young and nothing when old
University | National University of Singapore (NUS) |
Subject | BSE3703 Econometrics for Business I |
1. Consider the standard OLG model of money. Individuals are endowed with y units of the endowment good when young and nothing when old.
Assume that people face a lump�sum tax of τ goods when old and a rate of expansion of the fiat money supply of z > 1. The tax and the expansion of the fiat money stock are used to finance government purchases of g goods per young person in every period. There are N people in every generation.
a. Find the individual’s budget constraints when young and when old. Combine them to form the individual’s lifetime budget constraint and graph this constraint.
b. Find the government’s budget constraint.
c. Graph together the feasible set and the stationary monetary equilibrium.
d. Find the stationary monetary equilibrium when z = 1 and add it to the graph in part c.
e. Use a ruler on your graph to compare the real balances of fiat money when z > 1 to the values when z = 1.
Now assume that the utility function of people in the economy described in this economy is log(c1,t) + log(c2,t+1).
f. Find the real demand for money (vtmt) as a function of z and τ .
g. Find the government budget constraint in stationary equilibrium. Solve it for τ as a function of z . (The expression will also involve y and g.)
h. Substitute your expression for τ from the government budget constraint (part g) into the demand for money (part f).
Use this to represent seigniorage as a function of z alone. Graph seigniorage as a function of z. For the graph, use the following parameter values: N = 1000, y = 100, and g = 10
- Final Assignment: Migrating FashionOnline’s Infrastructure to AWS: A Strategy for Enhanced Availability and Data Protection
- HRM331: Talent Management – Strategic Shift from the War for Talent to the Wealth of Talent
- Marginalised Populations – The Structural and Cultural Exclusion of People Experiencing Homelessness in Singapore
- CVEN3501 Assignment 2: Groundwater Modelling of Drawdown from a Pumping Bore
- CSCI312 Assignment 2: Conceptual Modelling and Implementation of a Data Warehouse and Hive Queries
- CH2123 Assignment: Fugacity, VLE Modeling & Applications of Henry’s Law
- BAFI1045 Assignment -Constructing and Evaluating Passive and Active Portfolios Based on the Straits Times Index (STI)
- FIN2210E/FIN2212E Group Assignment: Financial Risk Management Analysis of Bursa Malaysia Companies
- FLM101 Assignment: A Film Analysis: Stylistic Techniques and Their Thematic Importance
- HRM Assignment Answer: Talent Transformation in the Age of AI: Turning Challenges into Opportunities via Ecosystem Innovation
UP TO 15 % DISCOUNT