Just trying to narrow down my formula sheet
Yah! And guess what you need to also learn the extended version:
TaylorPolicy rate: Rn + i + a(i - i*) + b (y-y*)
Real policy rate: real rate - i = Rn + a(i - i*) + b(y-y*)
Real exchange rate (A/B) = Equilibrium rate (A/B) + (real interest rate B - Real interest rate A) - (Risk premium B - risk premuim A)
substitute to equilibtium afterwards to get the longer version.
You need to understand more than memorize it. It will also help u to tackle conceptual questions!
sorry made a mistake i just noticed! Point is try to understand it and it will come to you at the exam with a good understanding and mathematical manipulation!
Lol there’s a LONGER version?? Nice try but my brain is full.
exactly my thought! Econ is not my strength area. I only memorized the long version hopefully it will add some easy points! Econ is a mess!