EC 202: Macroeconomic Theory

Dynamic Keynesian Model II of Income Determination
This model corresponds to Blanchard, Macroeconomics, Chapter 4, with two dynamic elements:
production decisions for the current quarter are made based on last period's sales,
and consumption depends on current, once-, and twice-lagged disposable income.
 
MPC from YD(t):
MPC from YD(t-1):
MPC from YD(t-2):
Note: MPCs from current and lagged disposable income must sum to less than 1.
Autonomous Consumption:
Investment Demand:
Government Spending:
Lump-Sum Taxes:
Policy Experiment:
Government SpendingTaxes
IncreaseIncrease
DecreaseDecrease
UnchangedUnchanged

baum, 30 Jan 1999