ECO200Y1 Lecture Notes - Lecture 20: Seigniorage, Time Series, Macroeconomics
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Document Summary
Macroeconomists came under criticism during and following the global financial crisis and the recession of 2008-09. As macroeconomic theory seemed ill equipped to incorporate financial frictions. Conventional economic theory with credit frictions as discussed in previous chapters can successfully account for the behavior of time series during the 2008-09 recession figure#1 macroeconomics 2018 edition. Notice that the government can print new money to finance spending. He choice of ms the domain of monetary policynote: We are assuming that there is a single institution governing fiscal and monetary policy, but this is not the case in real life(central bank independence) The labour and goods markets interact with the money market since they determiner andy however the equilibrium in the money market does not affect real quantities and prices in the goods and labour markets. In the monetary intertemporal model, a level increase in the money supply:increases the price level.
