Question: Hey ,,,,,, help me tutors kindly. Question 4 [20 points) This question considers a. variant of the standard New Keynesian model where the government can

Hey ,,,,,, help me tutors kindly.

Hey ,,,,,, help me tutors kindly. Question 4 [20 points) This questionconsiders a. variant of the standard New Keynesian model where the governmentcan now purchase a basket of goods G", which is completer fundedby lump sum taxes. Assume that Gt is not productive and doesnot provide utility. The linearized conditions are given below. In percentage deviations

Question 4 [20 points) This question considers a. variant of the standard New Keynesian model where the government can now purchase a basket of goods G", which is completer funded by lump sum taxes. Assume that Gt is not productive and does not provide utility. The linearized conditions are given below. In percentage deviations from steady state: 5; is consumption, iii: is the real wage. in is hours worked, it is output, of is real marginal cost and\" g; is government spending In deviations from steady state: it is the nominal interest rate in is ination. y; is the output gap (relative to the model 1with exible prions]: y= 1& y? Households Es5t+1 at = le Elise-1) {3} \"the = '55: + $53: {4} Firms t = t [5) o. :45. (6) A = Es('s-I-1l + Fi: [7) or and to come from household preferences. 1,:"or is the elasticity of intertemporal substi- tution and 1!: is the inverse of the Fiisch elasticity. is is inverser related to the degree of degree of price stickiness."I [I c: f]

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