Methods for solving rational expectations models

Assignment Help Macroeconomics

Reference no: EM13136990

Q1. Consider the following macro model:

165_Methods for solving rational expectations models.png

where y, p and m, are the logs of real output, prices and the money supply respectively and ?t is a monetary shock .

a) Identify three methods for solving rational expectations models?

b) Using your chosen method, find the rational expectations solution for prices (p) and output (y).

c) Using a maximum of 150 words discuss the policy implications of your results for monetary policy.

Reference no: EM13136990

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