Consider the ADL model Y₁ X, is strictly exogenous. - = 3.1 + 0.4Y₁-1 + 2.0X, 0.8X₁-1 + ₁, where a. Derive the impact effect of X on Y. b. Derive the first five dynamic multipliers. c. Derive the first five cumulative multipliers. d. Derive the long-run cumulative dynamic multiplier. Show that Explain.

Consider the ADL model Y₁ X, is strictly exogenous. - = 3.1 + 0.4Y₁-1 + 2.0X, 0.8X₁-1 + ₁, where a. Derive the impact effect of X on Y. b. Derive the first five dynamic multipliers. c. Derive the first five cumulative multipliers. d. Derive the long-run cumulative dynamic multiplier. Show that Explain.

ENGR.ECONOMIC ANALYSIS

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Chapter1: Making Economics Decisions

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Question

16.10 Consider the ADL model Y, = 3.1 + 0.4Y,_, + 2.0X, – 0.8X,-1 + ũ,, where
no bauol
Bto X, is strictly exogenous.
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a. Derive the impact effect of X on Y.
b. Derive the first five dynamic multipliers.
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fame Sc. Derive the first five cumulative multipliers.
Show that
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a0 g d. Derive the long-run cumulative dynamic multiplier.

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Step 1: Introduction To ADL :

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Step 2: Break down The given ADL Model :

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Step 3: a. Impact Effect Of X On Y :

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Step 4: b. First Five Dynamic Multipliers :

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Step 5: c. First Five Cumulative Multipliers :

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Step 6: d. Long -run Cumulative Dynamic Multiplier :

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