tailieunhanh - FW: Monetary and Fiscal Strategies in the World Economy_5

Tham khảo tài liệu 'fw: monetary and fiscal strategies in the world economy_5', tài chính - ngân hàng, ngân hàng - tín dụng phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả | 2. Some Numerical Examples 155 A second solution is an increase in European money supply of 2 units an increase in American money supply of 1 unit a reduction in European government purchases of 2 units and an increase in American government purchases of 1 unit. As a result given a supply shock in Europe monetary and fiscal cooperation is ineffective. The initial loss is zero. The supply shock in Europe causes a loss of 18 units. Then policy cooperation keeps the loss at 18 units. 3 A mixed shock in Europe. In each of the regions let initial unemployment be zero and let initial inflation be zero as well. Step one refers to the mixed shock in Europe. In terms of the model there is an increase in B1 of 6 units. Step two refers to the outside lag. Inflation in Europe goes from zero to 6 percent. Inflation in America stays at zero percent. Unemployment in Europe stays at zero percent as does unemployment in America. Step three refers to the policy response. According to the model a first solution is a reduction in European money supply of 4 units a reduction in American money supply of 2 units no change in European government purchases and no change in American government purchases. Step four refers to the outside lag. Inflation in Europe goes from 6 to 3 percent. Inflation in America stays at zero percent. Unemployment in Europe goes from zero to 3 percent. And unemployment in America stays at zero percent. For a synopsis see Table . A second solution is no change in European money supply no change in American money supply a reduction in European government purchases of 4 units and an increase in American government purchases of 2 units. A third solution is a reduction in European money supply of 2 units a reduction in American money supply of 1 unit a reduction in European government purchases of 2 units and an increase in American government purchases of 1 unit. First consider the effects on Europe. As a result given a mixed shock in Europe monetary and fiscal .