Money Flashcards
1
Q
Quantity theory of money
A
m+v=p+y
- y doesn’t depend on m
- v constant over the long run
- Empirical evindence for the short run suggests that here money does matter
2
Q
Phillips curve
A
In high-frequency data there ir
- Positive correlation between inflation rate and output growth
- Negative correlation between inflation rate and unemployment
3
Q
Sidrauski model
A
- Money enters positively into de utility function: transaction costs enter negatively and these costs depend negatively on the real balances of money
- c_t, m_t+1, b_t+1 are chosen
4
Q
Real interest rate definition
A
5
Q
Firm problem
A
6
Q
The Government
A
7
Q
Equilibrium
A
8
Q
Steady state
A
This implies:
- Contant:
- capital
- income
- consumption
- constant real balances
- contant inflation rate
9
Q
Neutrality and super neutrality
A
- Neutrality: real variables don’t depend on the price level or the money suply
- Super neutrality: real variables don’t depend on the inflation rate or the rate of growth of money
10
Q
Equilibrium conditions
A
11
Q
Super neutrality outside the steady state
A
12
Q
Friedman rule
A
Inflation rate should be equal to the real interest rate
13
Q
Criticism to the friedman rule
A
