Problem 1 : a,b,c,d. whats the solutions

1. Abstracting from longrun growth b_y setting n = g = 0 nd from persistent shocks by setting pA 2 pg 2 0, with At E inAt MA and Gt E inGt 1736', and normalizing the population to N = 1, the following nine equations describe the \"baseline\" REC model in Chapter 5: y; = c.+I.+G. (1) 3'2: = K?_1{AtLtll_n (2) Kt Ktl + I: 5Kt1 (3) 1'11: E11,: (4) t 50,: (5) 9": \"(AiLt/Killl_a 5 (5) W: = (1 GliKtIfAtLtlaAt (7) 1 1 a = as; [Ct+1 (1 + n+0] (3) Ct _ wt 1 _ a, j (9) where e\"J = ,3. (a) Find the steady state for t_his economyr under the following calibration: ct = 1/3, 5 = 0.05, F = 0.025, A = 1., and L = 0.5 and G such that G/Y = 0.2. In particular, nd the remaining parameter values is and p that are consistent with steady state and determine steadystate values for the endogenous variables, 17, E", f, 61', IE, and it). (b) Loglinearize the seven equations above excluding equations [4) and [5) for A; and Cat. (c) Write a Dynare .mod le to simulate this economy. Assume that .51 = pd_1 + a.\" and C3: = pghl + 59': are the loglinearized shocks. Set a = 1f3, 5 = 0.05, pg = pg = .8, e'"3 = 0.99, a\" = 059 = 1, and b = 1. Provide a graph of the impulse response of one standard deviation shock to technolog? and government spending. (Hint: This model is nearly identical to the one we went over in class. Rather than. start from scratch try modifying the Dwre .mod I have provided on Canvas. Also, you need to use {if}? = 0.2 to gure oat the steady parameter values needed to do your simulation.) (d) What is the eect of a positive government spending shock on the real wage? Explain. 2. Keynesian Paradoxes at the ZLB in a Pandemic: Consider the ISfLM and ADI/AS model we constructed in week S's lecture and drawn below [Figure 1). Assume in the short run that the price level is perfectly xed but wages are perfectly exible. The red line shows the maximum employment that can occur under social distancing rules. The blue line shows the