Exam 15: Dsge Models: the Frontier of Business Cycle Research

In 2003, Ireland reduced its corporate tax rate from 16 percent to 12.5 percent. In labor markets this would ________, which would ________.

The reason inflation ________ in the Smets-Wouters DSGE model if TFP rises is because ________.

An example of the limits of using TFP as the sole driver of recessions is:

With sticky prices in the stylized DSGE model, a monetary expansion: i. Increases real wages ii. Increases nominal wages iii. Reduces output

An important element of almost every DSGE model is:

What makes DSGE models difficult to solve is:

Which of the following features are frequently included in modern DSGE models? i. Nominal rigidities ii. Complete markets iii. Adjustment costs to capital

In the Smets-Wouters DSGE model, an increase in government spending will cause i. Real GDP to rise ii. Consumption to fall iii. Inflation to rise

When taxes are included in the stylized DSGE model, with Cobb-Douglas production, labor demand is given by:

If the classical dichotomy holds a change in monetary policy, it ________ and ________.

In the Smets-Wouters DSGE model presented in the text, contractionary monetary policy has the largest impact on:

In the stylized DSGE model, the variable that allows future events to affect the economy today is:

Suppose a worker gets a new computer; this would:

Refer to the following figure when answering Figure 15.3: The Labor Market -In the stylized DSGE model for the labor market displayed in Figure 15.3, with sticky prices, a monetary contraction would move the labor market from ________ because ________.