I what is the expression fornbspbt in terms ofnbspbtnbsp-1


A country has no in ation, is growing at 2.5% and has a nominal interest of 4%. It is presently running a budget de cit as a proportion of GDP of 6%.

(i) What is the expression for b(t) in terms of b(-1)?

(ii) What is the equilibrium debt/income ratio? Is this country a creditor or debtor in equilibrium?

(iii) If the initial debt/income ratio is 30%, will this rise or fall over time?

(iv) Draw against and the phase line for this model.

Request for Solution File

Ask an Expert for Answer!!
Mechanical Engineering: I what is the expression fornbspbt in terms ofnbspbtnbsp-1
Reference No:- TGS01257702

Expected delivery within 24 Hours