Output variability in an open-economy macro model with variance-dependent parameters

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by
Federal Reserve Bank of Minneapolis , [Minneapolis, Minn.]
Money supply -- Mathematical models., Foreign exchange rates -- Mathematical mo
StatementWarren E. Weber.
SeriesFederal Reserve Bank of Minneapolis, Research Department staff report -- 94, Staff report (Federal Reserve Bank of Minneapolis. Research Dept. : Online) -- 94.
Classifications
LC ClassificationsHB1
The Physical Object
FormatElectronic resource
ID Numbers
Open LibraryOL16426131M
LC Control Number2007702561

Output Variability in an Open-Economy Macro Model With Variance-Dependent Parameters Output Variability in an Open-Economy Macro Model With Variance-Dependent Parameters Share. Facebook LinkedIn Twitter.

Abstract. This paper analyzes the variability of output under money supply and exchange rate rules in an open economy in which the slope. Output variability in an open-economy macro model with variance-dependent parameters. By Warren E. Weber. Download PDF ( KB) Abstract.

This paper analyzes the variability of output under money supply and exchange rate rules in an open economy in which the slope of the aggregate supply curve depends on the variances of aggregate demand and Author: Warren E.

Weber. "Output variability in an open-economy macro model with variance-dependent parameters," Staff Rep Federal Reserve Bank of Minneapolis. Dale Henderson, " Exchange Market Intervention Operations: Their Role in Financial Policy and Their Effects," NBER Chapters, in: Exchange Rate Theory and Practice, pagesNational Bureau.

This approach has recently been popular in this kind of small economy macro-model as demonstrated by Buiter and Miller (). For a judicious choice of parameter values of the model, the system is Aggregate Dynamics in an Open Economy not only stable but also exhibits the characteristics one would like it to : Chulsoon Khang.

Output variability in an open-economy macro model with variance-dependent parameters. February Warren E. Weber; This paper analyzes the variability of output. circumstances (for example, a one-sector model is a key part of the restriction).

Applications Growth The Solow growth model is an important part of many more complicated models setups in modern macroeconomic analysis.

Description Output variability in an open-economy macro model with variance-dependent parameters EPUB

Its flrst and main use is that of understanding why output grows in the long run and what forms that growth takes. Production function. Y = f(K, L) The production function says that a nation’s output depends upon two things: The available factors of production (K, L).How good the technology (f) is at turning inputs (K, L) into output, simple equation means that if an economy is to grow, it either needs to increase the quantity/quality of its factors of production or improve upon its technology.

model of a small open economy with a pegged exchange rate, and starting from the equilibrium shown at the right, determine the effects of an upward shift in the investment function (∆I >0, meaning an increase in investment for each level of the interest rate).

First show in the diagram how the curves shift, then answer and explain in words below. The classical model for a closed economy 5. The Keynesian model for a small open economy in the long run = The classical model for a small open economy 9.

Introduction to the Keynesian model in the short and long run (for a closed economy) The Keynesian model for a closed economy with a horizontal SRAS-curve the long-run growth rate of output, but not the short run, one is already doing such a division.

There has been a debate in recent years over whether it is appropriate to do such a division; some claim that variables like output, rather than having a deterministic trend, as is claimed in the Solow model. output gap variability in a simplified, two-country, two-sector (tradable and nontradable goods) version of the global economy model (GEM), calibrated for Canada and the United States.

"Output variability in an open-economy macro model with variance-dependent parameters," Staff Rep Federal Reserve Bank of Minneapolis. Peter Stemp, " Optimal money supply rules under asymmetric objective criteria," Journal of Economics, Springer, vol.

Output Variability under Monetary Policy and Exchange Rate Rules. by Weber, Warren E. Prior Information and the Observational Equivalence Problem [The Observational Equivalence of Natural and Unnatural Rate Theories of Macroeconomics].

by Weber. matrix of short-run parameters, being k the number of lags; is a (p p) matrix of long-run parameters; Dt is a (m 1) vector of deterministic terms (a constant, a linear term, seasonal dummies, intervention dummies, etc); and t is a vector of errors which are assumed to be i.i.d Gaussian processes, that is: if.

Macroeconomic variables are a bit like family dynamics. It takes budgeting or delicate calculations, structure and give-and-take to keep an economy (or family) healthy, productive and stable. Economic output, the unemployment rate, inflation and interest rates each play a part in macroeconomics.

Book/Printed Material Output variability in an open-economy macro model with variance-dependent parameters "This paper analyzes the variability of output under money supply and exchange rate rules in an open economy in which the slope of the aggregate supply curve depends on the variances of.

MACROECONOMICS MatthiasDoepke UniversityofChicago AndreasLehnert BoardofGovernorsofthe FederalReserveSystem en GeorgeMasonUniversity. Macroeconomic variables (e.g. economic output, unemployment and employment, and inflation) play a vital role in the economic performance of any country.

For the past three decades, evidence of key macroeconomic variables helping predict the time series of stock returns has accumulated in direct contradiction to the conclusions drawn by the.

Relation between Macro and Micro • Micro and Macro are consistent applications of standard neoclassical theory. • Unifying theme, EQUILIBRIUM APPROACH: 1. Agents optimize given preferences and technology. Agents’ actions are compatible with each other. • This requires: 1. Explicit about assumptions.

Models as abstractions. The model is composed of: the mathematical model of national economy for optimizing investment scheme under economic and technological constraint (LP-model); the model of I-O analysis for estimating industrial structure induced by the investment; and the decision making model to which the results of the preceding models are fed so as to.

Problems or unemployment: Macroeconomics deals with various problems relating to the unemployment, economic fluctuations, inflation, deflation, international trade, economic growth etc. Total investment and output: It deals with various problems in the fields of total investment and total output of the country.

Economic Development: Economic development of a country is greatly. One obvious and popular way to test a model is to see how close its predicted values are to the actual values.

Say that you want to know how well the model explained output and inflation in the s. Given the actual values of the exogenous variables over this period, the model can be solved for the endogenous variables. I.6 The Solow growth model can be set up in the following way (dis-crete time version).

A closed economy is considered. There is an aggregate production function, = () (1) where is a neoclassical production function with CRS, is output, is capital input, is the technology level, and is the labor input. The Classical model is characterized through the supply-determined differ of real output as well as employment.

The role aggregate demand receives in determined production along with employment: 1) Perfectly flexible wages as well as prices; also, implicitly, 2) Perfect information, also, of course, completely competitive industries.

Chapter 3. CHAPTER 5 The Open Economy 10 foreign assets Foreigners owned $ trillion worth of U.S.

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assets U.S. net indebtedness to rest of the world: $ trillion--higher t han any other country, hence U.S. is the “ world’s largest debtor nation” Saving and investment in a small open economy An open-economy version of the loanable.

Quantity theory of money: MV = PY – a moneterist’s view which explains how changes in the money supply will affect the price level assuming the velocity of money and the level of output are fixed.

MPC + MPS = 1. Households may consume or save with any change in their income. Spending Multiplier = Tax multiplier = -MPCMPS. outside the model are exogenous variables. Because they are determined outside, ex-ogenous variables are assumed to be unaffected by changes in other variables in the model.

For example, the price and production of corn would be endogenous variables in a na-tional model of agricultural markets, while variables measuring the weather would.

Graduate Macro Theory II: Two Period Consumption-Saving Models Eric Sims University of Notre Dame Spring 1 Introduction This note works through some simple two-period consumption-saving problems.

In this model households receive an exogenous stream of income and have to decide how much to consume and save. Two periods is the minimum number. The major macroeconomic parameters crucial in the determination and review of the budget include the following level: level and growth in real/nominal Gross National Product (GNP) and Gross Domestic Product (GDP), inflation rate, day Treasury bill rates and the London Interbank Offered Rate.

Short-run fluctuations in output and policy implications of the short-run. Medium-run output determination in which output is subject to supply constraints. Long-run output determination and growth in a cross-country perspective.

Output decisions in an open-economy framework.”.

Details Output variability in an open-economy macro model with variance-dependent parameters FB2

nomic models. The economies can be non-linear and/or non-normal. We describe how to use the output from the particle filter to estimate the structural parameters of the model, those characterizing preferences and technology, and to compare different economies.

Both tasks can be implemented from either a clas-sical or a Bayesian perspective.Use of a broad range of macro factors in the Cox hazard model has not been extensively explored before. Duffie, Saita, and Wang () model the term structure of credit risk as depending on a small number of such factors.7 Their focus, however, is on building a forecasting model for credit risk that incorporates the time-series properties of the.Endorsements.

A clear, self contained, introduction to the structure of macroeconomic models and the tools of macroeconomics. Next time my students ask me how to setup a model for the dynamic effects of fiscal policy in a two-sector economy, or how they should think about introducing uncertainty in an endogenous growth model, I will tell them to start with Turnovsky's book.