Dear friends and professors
I have problem in finding my market clearing section in my DSGE model. can I have your worthy guidance ?
I can not gain national account equation I mean Y=C+G+I
I am working on a simple DSGE framwork, I have bank and government in my model.
the household budget constraint is C+I+B+D+T+Mc=ibB(-1)+WN+ikK+idD(-1)+ibB(-1)+Mc(-1)
I=k+(1-delta)K(-1)
Mc: money
B: bond
D: deposit
I: investment
K=capital
T: tax
WN: wage* worked hours
G: government expenditure
id: interest rate of deposits
ib: interest rate of bonds
ik: interest rate of capital
the bank is balance sheet:
L=(1-rr)d+Lcb+Kb
L is the loan of firm form bank, Lcb the loan of bank from central bank, Kb is capital of bank
firm covers a ratio of ltvf of its costs from loan of bank I mean: L=ltvf(WN+rkK)
the central bank is balance sheet, from sources
M=EFR+DG+Lcb
E exchange rate
FR foreign reserve
DG debt of government to central bank
Lcb debt of bank to central bank
Central Bank’s balance sheet from expenses:
M=Mc+(1-rr)D
the government resources and expenses to keep its budget balanced
G+B=T+DG-DG(-1)+ibB(-1)+E*OR
DG-DG(-1): seigniorage
OR: oil revenue
I would really appreciate it if you could guide me
What do you get when you combine budget constraints?
Dear Kofiemma
How we achieve market clearing condition, do we have any other way than combining constraints?
I am not sure I understand your problem. Y=C+I+G is typically a resource constraint, not a market clearing condition. You may have many markets that need to clear, but still this one resource constraint.
Dear Professor
thanks