ECOS3007 S1 2023 Final-Exam Formula Sheet
National income identity:
Y = C + I +G+ CA
CA = EX IM
National, private, and government sav-
ing:
S = Y C G
S = I + CA
Sp = Y D C = Y T C
Sg = T G
S = Sp + Sg
(Uncovered) interest parity condition:
R = R +
Ee E
E
Money market equilibrium:
M s
P
= L(R; Y )
P
P
=
M s
M s
L
L
Absolute and relative PPP:
E =
P
P
Et Et1
Et1
= t t
Fisher e¤ect (equation):
RR = e ;e
Real exchange rate:
q =
EP
P
E = q
P
P
Generalized Fisher equation with real ex-
change rate:
RR = q
e q
q
+ (e ;e)
Aggregate demand:
D = D
EP
P
; Y T; I; G
= C(Y T ) + I + G+ CA
EP
P
; Y T
Goods market equilibrium (DD sched-
ule):
Y = D
EP
P
; Y T; I; G
Asset markets equilibrium (AA sched-
ule):
R = R +
Ee E
E
M s
P
= L(R; Y )
Exchange rate under liquidity trap (R =
0):
E =
Ee
1R
2DD-AA model with credit market
Y = C + I + G+ CA
C C(Y T;Rd; "h)
I I(Rb)
CA = CA(E; Y T; Y )
M s
P
= L(R; Y )
R = R +
Ee E
E
Deposit and loan rates :
Rd = (R)
Rb = 1(R
d) + 2(K
B)
with y > 0, @1=@R
d > 0, @2=@K
B < 0.
Monetary-policy rule ( y > 0):
R = y (Y Y f )
Spillover e¤ect to a foreign economy (for-
eign consumption):
C C (Y T ) + (KBUS)
with @=@KBUS > 0.
DD-AA model with pandemic shocks
Y = C + I +G+ CA+ h"y
C = (1 s)Y
CA = aE mY
M s
P
= L(R; Y )
R = R +
Ee E
E
+ "R