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Cascadia's economy is symmetrical (replace the variables without star by variables with stars and vice-versa) Set up the equilibrium relation for each country in the

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Cascadia's economy is symmetrical (replace the variables without star by variables with stars and vice-versa) Set up the equilibrium relation for each country in the YY* space i.e. Y = f(Y*) as equation 1 and Y* = f'(Y) as equation 2 Y = (1) Y*= (2) Solve the system of equations to derive the joint equilibrium values of Y and Y* Y= Y*= Show the 2 relations (1) and (2) on the graph below and report the joint equilibrium - show the values of the intercepts and slopes. Y

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