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.

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

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.