## Introduction to Dynamic Macroeconomic Theory: An Overlapping Generations ApproachEconomies are constantly in flux, and economists have long sought reliable means of analysing their dynamic properties. This book aims to provide a succinct and accessible exposition of modern dynamic (or intertemporal) macroeconomics. |

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Page 270

For an individual living in a world with this government policy, the budget

constraints are c*(0 = u>*(0 - €*«) -

(

mh(t) ...

For an individual living in a world with this government policy, the budget

constraints are c*(0 = u>*(0 - €*«) -

**pm**(**t**)mh(t), and c*(< + 1) = + 1) + r(t)€h(t) +**pm**(

**t**+ l)jun*(/)- The amount of fiat money this individual has when old is equal to themh(t) ...

Page 278

This constraint gives us an arbitrage condition of r(i) =

top line of the lifetime budget constraint matters for individual utility maximization.

This expression is the same lifetime budget constraint we have seen many times

...

This constraint gives us an arbitrage condition of r(i) =

**pm**(**t**+ 1)/**pm**(**t**). Only thetop line of the lifetime budget constraint matters for individual utility maximization.

This expression is the same lifetime budget constraint we have seen many times

...

Page 279

1 = n - 1.

increase of the money supply minus 1, or \i — 1. In a stationary monetary

equilibrium, it is fairly simple to calculate the amount of seignorage for each rate

of increase ...

1 = n - 1.

**pm**(**t**+ 1) The equilibrium inflation rate is equal to the gross rate ofincrease of the money supply minus 1, or \i — 1. In a stationary monetary

equilibrium, it is fairly simple to calculate the amount of seignorage for each rate

of increase ...

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### Contents

Describing the Environment | 5 |

Competitive Equilibrium | 32 |

Introducing a Government | 55 |

Copyright | |

10 other sections not shown

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### Common terms and phrases

45-degree line A-period bonds aggregate savings function amount arbitrage assets autarky Bailey curve bequests bliss point borrowing and lending budget line capital stock Chapter chooses competitive equilibrium Consider an economy consumption allocation consumption point consumption when old consumption when young credit controls crop endowment point equal Equation equilib equilibrium condition equilibrium price example economy exchange rate EXERCISE expected price fiat money Figure given gives government bonds government revenues gross interest rate growth rate hold indifference curve individual h inflation labor lifetime budget constraint market clearing maximize member h money creation money supply output Pareto optimal Pareto superior perfect foresight period person h pm(t present value price of land price path price sequence private borrowing production function Proposition purchase quantity rate of return reserve requirement restrictions result Ricardian equivalence seignorage solve stationary equilibrium stationary monetary equilibrium storage sumption tax-transfer scheme taxes and transfers temporary equilibrium tion utility function