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RDP 8611: The Effectiveness of Fiscal Policy in an Economy with Anticipatory Wage Contracts
Equation
e
z
−
w
≃
e
z
^
−
w
^
(
1
−
z
^
+
w
^
+
z
−
w
)
.
Hence
D
e
−
m
≃
{
(
D
ο
−
t
+
(
ρ
−
θ
)
e
b
^
)
(
1
+
m
^
−
m
)
+
(
ρ
e
b
^
−
t
)
y
+
(
ρ
−
θ
)
e
b
^
(
b
−
b
^
)
∫
e
−
m
^
.
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