MGEA06H3 Study Guide - Final Guide: Bell System, Kolmogorov Space, Monetary Policy
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MGEA06H3 Full Course Notes
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Outline: the ae model the open economy version, discuss the effectiveness of monetary and fiscal policies under flexible exchange rate, discuss the effectiveness of monetary and fiscal policies under fixed exchange rate, wrap up the course! The ae model in generic form the full version. C = c0 + c1di, where di = y t + tr. I = i0 d(r r ) Im = im0 + im1y + im2(e e) Ae = c0 + c1[y (t0 + t1y) + (tr0 tr1y)] + [i0 d(r r )] + g + [x0 x1(e e)] [im0 + im1y + im2(e e)] Ae = c0 + i0 + g + x0 im0 c1t0 + c1tr0 d(r r ) (x1. + im2)(e e) + [c1(1 t1 tr1) im1]y. Ae = ae0 + cyy, where ae0 = c0 + i0 + g + x0 im0 c1t0 + c1tr0. D(r r ) (x1 + im2)(e e) cy = c1(1 t1 tr1) im1.