QUESTION 4 (5 Marks) Considering the following model: Ct = ao+a1 Yt + a2Ct-1+ut It Bo + B1Rt + B₂lt-1 + 121 Rt = 10 +11

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Question 4 5 Marks Considering The Following Model Ct Ao A1 Yt A2ct 1 Ut It Bo B1rt B Lt 1 121 Rt 10 11 1 (31.08 KiB) Viewed 12 times

QUESTION 4 (5 Marks) Considering the following model: Ct = ao+a1 Yt + a2Ct-1+ut It Bo + B1Rt + B₂lt-1 + 121 Rt = 10 +11 Yt +12Mt + U3t Yt=Ct+It+Gt Where: C, denotes real consumption, Y, denotes real national income, I, denotes real investments, M, denotes real money supply, R, denotes the interest rate, and G, denotes real government expenditures. I. Identify the endogenous and exogenous variables in the model. (2 Marks) II. Check the identifiability of the model by applying both the order and the rank conditions for identification. (3 Marks)