General Equilibirum Theory

• Macroeconomic General Equilibrium (One-period)
• Household Intertemporal Consumption Only Optimization
• Intertemporal Consumption-Leisure Optimization (Full General Equilibrium)
• Real Business Cycle Model
• Money (Medium of Exchange) Variables
• Dynamic, $\tau =t_0,t_1$:
  • Real Prices: real wage $w$, real interest $r$, risk premium $x$
  • Nominal price $P$, nominal wage $W$, nominal interest $R$
  • Household: labor $N$, utility function $u(\cdot )$, leisure $\ell$—consumption $C$, lifetime wealth $W$
  • Firm: Capital $K$, labor $N$, Production Function $F(\cdot )$, investment $I$
  • Government $G=T$
  • Monetary: $M$, Liquidity function $L(r,Y)$
• Static: lifetime wealth $W$ Market Functions Dynamic, $\tau =t_0,t_1$
• $N^s$: $w_0^{+},r_0^{+},{\text{We}}^{-}$
• $N^d$: $z_0^{+},K_0^{+}$
• $Y^d$: positive among
  • $C^d$: $r_0^{-},Y_0^{+},{\text{We}}^{+}$
  • $I^d$: $r_0^{-},K^{-},z_1^{+}$
  • $T=G$: but consumption less responsive than tax, so tax multiplier higher
• $Y^s$: $N^{s+}$ but not when $r$, $N^{d+}$ $F(\cdot {)}^{+},z_0^{+}$
• $L$: $r_0^{-},Y_0^{+}$ (clockwise)