23. A textbook macro-economic model
Our textbook model is a very simple and unpretentious first year undergraduate model. It is not interesting for itself, but for our later discussion.
The IS-LM model
We follow Dornbusch & Fischer (1994), chapters 1 - 4. The basic macro-economic identity for annual real values is:
C + G + I + NX
YR
YD + (RTAX - TRF)