User:Nick Gardner /Sandbox: Difference between revisions

Revision as of 05:08, 22 November 2009

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+<ref>[http://www.bankofengland.co.uk/monetarypolicy/framework.htm ''Monetary Policy Framework'', Bank of England, 2009]</ref>
-==The Keynesian equation system==
-Let:-<br>
-&nbsp;&nbsp;&nbsp;&nbsp;y&nbsp;=&nbsp;the thenational income<br>
-&nbsp;&nbsp;&nbsp;&nbsp;N&nbsp;=&nbsp;numbers employed<br>
-&nbsp;&nbsp;&nbsp;&nbsp;W&nbsp;=&nbsp;the money wage<br>
-&nbsp;&nbsp;&nbsp;&nbsp;P&nbsp;=&nbsp;the price level<br>
-&nbsp;&nbsp;&nbsp;&nbsp;M&nbsp;=&nbsp;the money supply<br>
-&nbsp;&nbsp;&nbsp;&nbsp;l&nbsp;=&nbsp;the income elasticity of demand for money<br>
-&nbsp;&nbsp;&nbsp;&nbsp;L&nbsp;=&nbsp;the interest elasticity of demand for money<br>
-then:-<br>
-The demand for money
-:::::: M&nbsp;=&nbsp;lPy&nbsp;+&nbsp;L(r) &nbsp;&nbsp;------------------------&nbsp;(1)
-The consumption function
-::::::  s&nbsp;=&nbsp;s(y)&nbsp;&nbsp;&nbsp;--------------------------------&nbsp;(2)
-The production function
-::::::y&nbsp;=&nbsp;y(n)&nbsp;&nbsp;------------------------------------&nbsp;(3)
-The labour market
-::::::dy/dn&nbsp;=&nbsp;W/P&nbsp;&nbsp;-------------------------------&nbsp;(4)
-Investment
-::::::i&nbsp;=&nbsp;i(r)&nbsp;&nbsp;---------------------------------------&nbsp;(5)
-Savings
-::::::s&nbsp;=&nbsp;i&nbsp;&nbsp;------------------------------------------&nbsp;(6)
-Sticky wages
-::::::W&nbsp;=W<sub>o,<sub>&nbsp;&nbsp;---------------------------------------------------&nbsp;(7)