Furthermore, the second term on the right-hand side of (8.12) becomes: 7rw + 7TLLD,, = 7rw =

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Furthermore, the second term on the right-hand side of (8.12) becomes:

7rw + 7TLLD,, = 7rw = -L, (8.14)

since the solution lies on the labour demand curve, so that 74 = 0. By substituting

(8.13)-(8.14) into (8.12), and simplifying, we obtain the real wage expression for the RTM model (the counterpart to (8.9)):

(v — V) -1 [Vw + = -(1 - (7r - 7- ) -1 7rw 71 ,LN [wuw — ED [U(W) - u(B)]]=

(1 - A)(V -

xo.e. L

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Foundations Of Modern Macroeconomics

ISBN: 9781264857937

1st Edition

Authors: Ben J. Heijdra, Frederick Van Der Ploeg

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Question Posted: Nov 12, 2024 07:00 AM

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Furthermore, the second term on the right-hand side of (8.12) becomes: 7rw + 7TLLD,, = 7rw = -L, (8.14) since the solution lies on the labour demand curve, so that 74 = 0. By substituting...
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1.12) can be simplified to: (8.13)
wuw - ED [u(w) - u(B)] = A(1/ _ fr. ) ) (1 - A [u(w) - u(B)], )wL
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Furthermore, the second term on the right-hand side of (8.12) becomes: 7rw + 7TLLD,, = 7rw =

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Foundations Of Modern Macroeconomics

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