QUESTION 4 Considering the following model: Ct = ao+a1 Yt + a₂Ct-1+ut It = Bo + B1R₁ + B2lt-1 + 121 Rt = 10 +1 Yt +12Mt + 13t Y₁ = Ct+It+Gt Where: C, denotes real consumption, Y denotes real national income, I denotes real investments, Me denotes real money supply, R, denotes the interest rate, and Ge denotes real government expenditures. I. Identify the endogenous and exogenous variables in the model. II. Check the identifiability of the model by applying both the order and the rank conditions for identification.

QUESTION 4 Considering the following model: Ct = ao+a1 Yt + a₂Ct-1+ut It = Bo + B1R₁ + B2lt-1 + 121 Rt = 10 +1 Yt +12Mt + 13t Y₁ = Ct+It+Gt Where: C, denotes real consumption, Y denotes real national income, I denotes real investments, Me denotes real money supply, R, denotes the interest rate, and Ge denotes real government expenditures. I. Identify the endogenous and exogenous variables in the model. II. Check the identifiability of the model by applying both the order and the rank conditions for identification.

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter18: The Keynesian Model

Section: Chapter Questions

Problem 9SQP

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