This week we'll be looking at models of interest rate determination in closed and open economies. Before we get there, though, it makes sense in the light of the forthcoming budget to think about aggregate demand, the money creation process, and especially tax financing of government deficits. And it just so happens I've got a model of that exact thing. Funny, eh? Then we'll move onto a model of an open economy with endogenous sterlisation or fixed exchange rates. This model, by Wynne Godley and Marc Lavoie, has a lot to say about our current predicament, and we'll mess about with it tonight.
Here are the lecture notes:EC6012_2009_MD.pdf EC6012 Lecture 7 - Models of Money Demand , and here are the slides: EC6012 Lecture 7 - Models of Money Demand