Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

iv. We Introduce a shock at 1 - 0 by (1) adding a shock multiplier (the value of 2 in this case) in call B23

image text in transcribed
iv. We Introduce a shock at 1 - 0 by (1) adding a shock multiplier (the value of 2 in this case) in call B23 and then (il) multiplying the value in cell Bad by it: In., the equation in cell Bit is - 835 + 823. At this point your values for the saving rate should look like those in the figure above. To weify that this is working, if you (f) change the value in cell B24 to 1 then all of the saving rates should be 0.1 and (U) if you change the value in cell BE to $ them all saving rates before : - 0 should be 0.1 and the rest should be 01.. (e) Copy cells B23 to Bed into columns C. D. E, and F, and change the pre-shock values in row 24 and the column headings in row 25 as shown in the figure shove. (d) Populate cells G26 to GAG with values of &" ARE + BL+ using the value of the variables in each row. Note how the shock to s changes k* at f - 0 () To initialize and evolve kit): I. Set the initial condition oft - -10) - x* in cell H2 and in cell 126 put the result of At with the time derivative calculated using values at $ - -10. Hi. Evolve w() with the Euler algorithm Kit + At) - X(t) + + XM with the equation in cell H27 of - 825 + 125 + 1. for our time step of 1 your. Hi. Calculate de/ de in cell 127 in the same way that you calculated the value in cell 120. Iv. Complete the evolution for all times by copying the equations in calls H27 and 127 into all cells below to cells Hit and ISs. (f Calculate the gap in column J using the values for &", kit), and a in columns G. H, and F. Note how the economic is initially in steady state (gap - 0), has a negative gap in response to the shock at : - 0, and how the gap relaxes after the shock as a result of a[t) moving toward &" for f 3 0

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essays In Economic Sociology

Authors: Max Weber, Richard Swedberg

1st Edition

0691218161, 9780691218168

More Books

Students also viewed these Economics questions