Topic 6: Equilibrium in a Dynamic Model
Videos
Consumer Response to Income Change in Dynamic Model
- How should consumers respond if they receive more income in the current period? What if they anticipate receiving more income in the future? Or what if they get more current and future income? We tackle these scenarios in the next video.
Consumer Response to Interest Change in Dynamic Model
- How should consumers respond if the real interest rate changes? Does it matter if the consumer was a borrower or a saver? This video will break down the income and substitution effects to analyze how different consumers behave when the interest rate changes.
Competitive Equilibrium in the Dynamic Model
- Now that we have a good handle on consumer behavior in the dynamic model, let's add in the government (which can now also borrow or lend, thereby running a deficit or surplus) and define a competitive equilibrium.
Ricardian Equivalence
- Does it matter when a government levies taxes, for example now or in the future? How does a change in the timing of taxes affect consumer decisions? The concept of Ricardian Equivalence addresses exactly these questions.