con Consider an OLG model in which no = 100, and The gross population growth rat
ID: 1168848 • Letter: C
Question
con Consider an OLG model in which no = 100, and The gross population growth rate is equal to Each individual only receives y = 100 coconuts when he is young, and nothing when old. The monetary authority introduces M = 1000 units of fiat money in The first period, and distribute them equally among The initial old generation in that period. M is a constant, i.e. The monetary authority does not increase or decrease The money supply. Finally, suppose everyone wants to consume half of his endowment while young, and exchange The rest for money to be used in The second period of his lifetime. Calculate v1, V2. and V3 for n = 1, 2. and 3. vt is The real value of one unit of fiat money in period . Compare The real returns on money. How does The price of one coconut change over time? Calculate m1, m2. and m3 for n = 1, 2. and m3. mt is The amount of fiat money a young agent carries into The second period of his lifetime. In a stationary equilibrium, what are C1 and c2?Explanation / Answer
a) c1,t + k2,t+1 = wt
c2,t+1 + k3,t+2 = wt+1 + (1 + rt+1 )k2,t+1
c3,t+2 = (1 + rt+2 )k3,t+2
return of fiat money ( vt+1 /vt ).
b) e m1,t = ptz1,t
m2,t+1 = pt+1z2,t+1 ptz1,t
c) (c1 , c 2 ): consumption allocation of generation.
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