Understanding Fiscal Contracts and Economic Impact
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Fiscal Contract
= C+Output baj IS no camb cdo baja i Islm, baja Ms= sube i+no inicial en Y I spending dpnd en i. aument G=baja I Cambios Ms no afect price level short run LM comb i+Y mantien eq n financ mrk. Reduct consumr confidnc=left shift is curv I spending dpnd output= baja i Aggregate supply relation, current Plevel dpnd expectd pric level Fixed IS curve: baj i sube I CB=opn mkt purchase bonds=lm abajo Real supply=stock € medid n bns,no $ ISLM,baja G, baja gradual i+Y AS: baj output,baja unemployment,baja nominl wage,baja P. I no dpnd i =baja Ms no camb output CB compr bons y aument T y baja i Xpansionry: sube Pbons baja i Aument (c), ppcion € persns quiern en moned baja money multiplier Contract: bajn bons,sub i CB open market sale... Continue reading "Understanding Fiscal Contracts and Economic Impact" »