Consider the following two models
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Model A
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Model B
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y(t)= 9 + 0.2(m - p(t)) p(t + 1)- p(t)= 1.2(y(t)- yn) m = 5 yn = 6 p(0)= 10
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y(t)= 9 + 0.2(m - p(t)) p(t + 1)- p(t)= 1.5(y(t)- yn) m = 5 yn = 6 p(0)= 10
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(i) What are the recursive equations for each model and what is their fixed point?
(ii) Compare the adjustment of prices in each model.