Master Thesis - Humboldt-Universität zu Berlin
Master Thesis - Humboldt-Universität zu Berlin
Master Thesis - Humboldt-Universität zu Berlin
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¯M d<br />
Ȳ<br />
= χ ¯C<br />
(1 − θ)(<br />
ν Ȳ + Ī<br />
Ȳ + ¯X<br />
Ȳ ) (92)<br />
¯D d<br />
Ȳ<br />
= (1 − ν)χ ¯C<br />
(1 − θ)(<br />
ν Ȳ + Ī<br />
Ȳ + ¯X<br />
Ȳ ) (93)<br />
¯M f<br />
Ȳ<br />
= (1 − ν)χ ¯C<br />
(1 − θ)(<br />
ν Ȳ + Ī<br />
Ȳ + ¯X<br />
Ȳ ) (94)<br />
Ō f<br />
Ȳ<br />
¯C<br />
= θ(<br />
Ȳ + Ī<br />
Ȳ + ¯X<br />
Ȳ ) (95)<br />
¯Θ f<br />
Ȳ<br />
¯C<br />
= (1 − θ)(<br />
Ȳ + Ī<br />
Ȳ + ¯X<br />
Ȳ ) (96)<br />
In order to reduce the number of variables we simply express them as<br />
a function of D t and M t . The law of motion for the relative domestic vs.<br />
foreign imputs that are combined in the distribution sector depends on their<br />
elasticity of substitution and relative prices:<br />
ˆD f t − ˆM<br />
ˆ<br />
t d=− ρ<br />
1+ρ (− P<br />
t<br />
Md<br />
P<br />
t<br />
D<br />
−Ω( ˆD f t − ˆM t d−( ˆD f t−1 − ˆM t−1 d ))+βΩ( ˆD f t+1 − ˆM t+1 d −( ˆD f t − ˆM t d )) (97)<br />
Market equilibrium equations (28) and (29) as well as (17), (18), (21) and<br />
(22) gives us:<br />
33
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