## 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 66

If r(t) equals l/p(t), then the portion in square brackets is 0. If r(/) is less than I /p(t),

then it is negative. We wish to show that the interest rate on

and lending, r(t), must be equal to the rate of return on government bonds, 1 /p(t).

If r(t) equals l/p(t), then the portion in square brackets is 0. If r(/) is less than I /p(t),

then it is negative. We wish to show that the interest rate on

**private borrowing**and lending, r(t), must be equal to the rate of return on government bonds, 1 /p(t).

Page 67

sired) in the

borrowing to purchase government bonds. A profit of l/p(t) - r(t) is made on each

purchased bond that is financed by borrowing on the

additional ...

sired) in the

**private borrowing**market and to use the revenues from theborrowing to purchase government bonds. A profit of l/p(t) - r(t) is made on each

purchased bond that is financed by borrowing on the

**private loan**market. Eachadditional ...

Page 329

reserves. However, a considerable portion of

. In this model, we impose reserve requirements on all

**Private lending**, such as the purchase of private bonds, does not normally requirereserves. However, a considerable portion of

**private lending**goes through banks. In this model, we impose reserve requirements on all

**private lending**, both to ...### What people are saying - Write a review

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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