http://www.gmu.edu/departments/economics/bcaplan

Econ 816

Spring, 2000

**HW#3**

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**Part 1: Mathematical Problems**

1. Romer, problem 5.2.

2. Romer, problem 5.4.

3. Romer, problem 6.15.

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**Part 2: Analytical Problems**

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__TYPE__* succinct (1 page or less!)
answers to each of the following:*

1. What is
the *least*
implausible mechanism for policy to work in an RBC model? Why?
Do Braun and McGrattan appeal to this mechanism in their analysis? Are they successful?

2. Briefly explain (TOTAL of 1 page):

a. Why the uninsured competitive equilibrium is sub-optimal in the Rogerson model.

b. Why King and Plosser fail to prove that nominal money and real output are correlated in their model.

3. Briefly describe one interesting/unusual monetary episode from Friedman and Schwartz, and outline your best explanation for what happened.

4. Several critical replies to ADP follow their article. Which objections are most telling? How might ADP reply?