Solve for the value of short-run output and inflation rate

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Reference no: EM131107535

Consider an inflation shock example where the o ¯ term jumps (positively).

Given parameter values o ¯ = 9% (the exogenous price shock), a ¯ = 0, b = .6, m ¯ = 1, v ¯ = .4, and π ¯ = 3%, solve for the value of short-run output and the inflation rate for the first three years following the shock; i.e., find πt and Y ~t for t = 1, 2, 3.

Reference no: EM131107535

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