Intuitively, a loose relative monet

Intuitively, a loose relative monetary policy precipitates a depreciation of the exchange rate
while a higher relative consumption level yields an appreciation.
3.2 Long run equilibrium
We now turn to the policy experiment of an unanticipated asymmetric fiscal shock. What will
happen to the key variables if the government raises its tax-financed expenditures? For welfare
analysis purposes it is crucial to determine the dynamic response of consumption and hours
worked because both enter the utility function of the representative agent. The movement of
the exchange rate is at the center of our analysis as it determines consumption, hours worked,
and the terms of trade. The latter are in turn decisive for the distribution of gains in trade
and therefore have strong implications for the welfare effects of fiscal shocks.
Though our set of equations is complex, it is possible to solve for the individual variables,
because the dynamic system reaches its new steady state right after the shock period. This
feature is due to the special form of price rigidities - prices have to be set before the occurrence
of shocks but may be changed in the following period - and some more subtle issues such as the lack of capital accumulation. Given this special structure, we may split the algebraic
problem into two parts that can be treated (almost) independently. First, we solve for the long
run (post shock, flexible price) values of the international consumption differential and the
exchange rate. It turns out that these depend on exogenous variables and endogenous bond
holdings that are determined in the short run (post shock, rigid prices). Second, we solve for
the short run equilibrium given the long run values of the variables. The combination of the
short run (period t) and long run (period t+1) solution finally yields the solution for exchange
rates, consumption levels, hours worked, price levels and so forth. The essential link between
the short and long run system will be the bond holdings acquired in the shock period.10 The
following system of equations includes the market clearing and optimality conditions that define
the long run equilibrium.

Hasil (Bahasa Indonesia) 1:

Secara intuitif, kebijakan moneter yang longgar relatif presipitat depresiasi nilai tukarSementara tingkat konsumsi relatif lebih tinggi menghasilkan penghargaan.3.2 keseimbangan jangka panjangKita sekarang beralih ke percobaan kebijakan shock fiskal asimetris yang tak terduga. Apa yang akanterjadi pada variabel kunci jika pemerintah menaikkan pengeluaran yang dibiayai pajak? Untuk kesejahteraantujuan analisis yang sangat penting untuk menentukan respon dinamis konsumsi dan jambekerja karena keduanya masuk fungsi utilitas agen perwakilan. Gerakannilai tukar adalah di pusat analisis kami karena ini menentukan konsumsi, jam bekerja,dan syarat-syarat perdagangan. Yang terakhir pada gilirannya menentukan untuk distribusi keuntungan dalam perdagangandan karena itu memiliki implikasi besar untuk efek kesejahteraan fiskal guncangan.Meskipun kita set persamaan kompleks, dimungkinkan untuk memecahkan variabel individu,karena sistem dinamis mencapai keadaan stabil baru tepat setelah periode shock. IniFitur karena bentuk khusus kekakuan harga - harga harus diatur sebelum terjadinyaguncangan tetapi dapat berubah dalam periode berikutnya - dan beberapa isu yang lebih halus seperti kurangnya akumulasi modal. Mengingat struktur khusus ini, kita dapat memisahkan aljabarmasalah menjadi dua bagian yang dapat diobati (hampir) secara independen. Pertama, kita menyelesaikan panjangmenjalankan (posting shock, harga fleksibel) nilai-nilai diferensial konsumsi internasional danexchange rate. It turns out that these depend on exogenous variables and endogenous bondholdings that are determined in the short run (post shock, rigid prices). Second, we solve forthe short run equilibrium given the long run values of the variables. The combination of theshort run (period t) and long run (period t+1) solution finally yields the solution for exchangerates, consumption levels, hours worked, price levels and so forth. The essential link betweenthe short and long run system will be the bond holdings acquired in the shock period.10 Thefollowing system of equations includes the market clearing and optimality conditions that definethe long run equilibrium.