Question
Suppose that you have a sticky price New Keynesian model in which the ZLB is binding. Consider an exogenous reduction in At+1. Show how this
Suppose that you have a sticky price New Keynesian model in which the ZLB is binding. Consider an exogenous reduction in At+1. Show how this affects the equilibrium values of the endogenous variables of the model, including labor market variables. Comment on how these effects compare relative to the case in which the ZLB does not bind.
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Fundamentals of Managerial Economics
Authors: Mark Hirschey
9th edition
324584830, 978-0324588781, 032458878X, 978-0324584837
