Re: macro doubt

Posted by L14 on Mar 11, 2014; 4:56pm
URL: http://discussion-forum.276.s1.nabble.com/macro-doubt-tp7585168p7585174.html

I think the answer is a

Wage setting:
W = Pe*z*ln(1/u)

Price setting:
W/P=A/(1+µ)
=> W=AP/(1+µ)

Equating both
AP/(1+µ) =Pe*z*ln(1/u)

N=Ys/A
u=1-N
u=(A-Ys)/A

=> AP/(1+µ) =Pe*z*ln(A/(A-Ys))

At natural level of o/p P=Pe
=> A/z(1+µ) =ln(A/(A-Yn))
taking exponontial
exp[A/z(1+µ)]=A/(A-Yn)
A-Yn = A*exp[-A/z(1+µ)]
Yn=A*[1-exp[-A/z(1+µ)]]