Relationship of solow growth model to the rbc model

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Reference no: EM13718713

Please answer theflow 4 questions on MS Word.

1. Explain the relationship of Solow growth model to the RBC Model? Give examples of a shock to TFP, to labour and to capital?

2. How does the New Keynesian (NK) model differ from the Real Business Cycle (RBC) model? And what is the role of government in the managing the business cycle in each?

3. During the Dot.Com bubble in the USA in 2006, technology improved rapidly and productivity rose rapidly and persistently. Explain the implications of such productivity increases using the RBC model, using graphs for the labour, output and monetary sectors.

4. To better explain the 2007 financial crisis, Williamson proposes a New Monetarist Model (NMM) that includes a measure of financial liquidity. Briefly describe Williamson's new ideas in the NMM. What happens to financial liquidity during a financial crisis and how is it transmitted to the real economy.

Reference no: EM13718713

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