An Economical Business-Cycle Model: AD-AS Diagrams

This repository contains the AD-AS diagrams from the paper "An Economical Business-Cycle Model", written by Pascal Michaillat and Emmanuel Saez, and published in Oxford Economic Papers in April 2022.

Paper webpage

The paper is available at https://pascalmichaillat.org/7/. The AD-AS diagrams appear in figures 2–8.

Diagram descriptions

The AD-AS diagrams are drawn by hand using Keynote on Mac, and then exported to PDF.

• figure2.key, figure2.pdf – Figure 2: solution of the model
• figure3.key, figure3.pdf – Figure 3: response to a negative AD shock
• figure4.key, figure4.pdf – Figure 4: response to a negative AS shock
• figure5.key, figure5.pdf – Figure 5: response to a decrease in nominal interest rate
• figure6.key, figure6.pdf – Figure 6: response to an increase in wealth tax rate
• figure7.key, figure7.pdf – Figure 7: optimal monetary policy restores efficient unemployment when the unemployment gap is small
• figure8.key, figure8.pdf – Figure 8: optimal monetary policy reaches the zero lower bound when the unemployment gap is large

License

The content of this repository was created by Pascal Michaillat and Emmanuel Saez and is licensed under the Creative Commons Attribution 4.0 International License.