Expansionary Monetary Policy, Land Finance and Real EstateSpeculationMouhua Liao�Xiamen UniversityAugust 10, 2018AbstractKeywords:JEL classi�cation:1 Introduction2 The model2.1 EnvironmentConsider a version of overlapping generation models, where agents live for three days. Ineach day, a �xed number (Lyt) of young workers is born. Utility of workers comes from theconsumption of a good and housing services. The young worker can choose to live and work inthe rural area, where he can live in the exiting house with a size h. The young worker can alsochoose to live and work in the city, where he need to purchase (rent) a house to live. A workercan not change the choice of location in his whole life. A worker supplies 1 unit of labor in thelocation where he lives when he is young and middle aged and none when he is old.The initial productivity A0 that is used to produce the �nal good is given. Then At isgrowing at rate g. Initial capital stock K0 and infrastructure F0 are given. There is �xedamount of land, N. All decisions are made at the end of each day. In each day t, we normalizethe price of the good to be pt. A house is a durable good and it depreciates at rate �H. Hence,after a young worker purchases some amount of housing, he can consume the housing serviceswhen he is middle aged and then resell it.In each day, there are two periods. In the daytime, the good is produced and consumptiontakes place. In the night, housing is traded. Money is required to purchase the housing. The isdiscount between two daytimes.2.2 Workers in rural areaA worker�s utility comes from the consumption of the good and housing services. For a youngworker who is born at time t, his life-time utility isUat = ln(ca1;t) +��ln(c�2;t+1) + (1��)ln�h��+2 ln(c�3;t+2),0 0, �00(�) 1 times valueof land as collateral. In case the local government is not able to pay (the interest of) the load.The bank can take over the land and sell it in the new housing market. However, this may leadto lower land (housing) price. Hence, � > 1 can be used to provide an insurance to the bank.2.8 Central government (bank)There is �xed amount of money, M0, which is determined (e.g, by making transfer to agents)exogenously. Here, we assume that the central bank can adjust the total money supply bymaking loans to or borrow from the commercial bank at the market�s deposit interest rate, r0t.That is, we consider a kind of money policy such that the central bank sets idea deposit interestrate, r0t. Then the central bank adjusts his lending to the commercial bank to clear the loanmarket. Therefore, total money supply in this economy isMt = M0 +Mt;R, (6)where Mt;R is the amount of lending to the commercial bank.The interest earned on the lending to the commercial bank is transferred to the centralgoverment (Mt�1;R)r0t.The central bank also decides the upper bound fraction of lending to local governments, �.The central government gets the pro�t of local banks, which includes the revenue fromprinting money. Since we focus on the e¤ect of in�ation on housing market, we assume that,the central government transfer the revenue to the local government.2.9 Local governmentsThe local government in each city is run by a mayor. The local government owns the land andgets the rent from the land. We assume that, because of the incentive system provided by thecentral government, the mayor of day t cares about the welfare of the young worker in day t+1,the stock of infrastructure and the output of the good. Here, the the stock of infrastructure istaken as an achievements of the mayor. Obviously, the mayor does not care about the welfareof the future generations. That is, the problem of the mayor is本团队核心人员组成主要包括硅谷工程师、BAT一线工程师，精通德英语！我们主要业务范围是代做编程大作业、课程设计等等。我们的方向领域：window编程 数值算法 AI人工智能 金融统计 计量分析 大数据 网络编程 WEB编程 通讯编程 游戏编程多媒体linux 外挂编程 程序API图像处理 嵌入式/单片机 数据库编程 控制台 进程与线程 网络安全 汇编语言 硬件编程 软件设计 工程标准规等。其中代写编程、代写程序、代写留学生程序作业语言或工具包括但不限于以下范围:C/C++/C#代写Java代写IT代写Python代写辅导编程作业Matlab代写Haskell代写Processing代写Linux环境搭建Rust代写Data Structure Assginment 数据结构代写MIPS代写Machine Learning 作业 代写Oracle/SQL/PostgreSQL/Pig 数据库代写/代做/辅导Web开发、网站开发、网站作业ASP.NET网站开发Finance Insurace Statistics统计、回归、迭代Prolog代写Computer Computational method代做因为专业，所以值得信赖。如有需要，请加QQ：99515681 或邮箱：99515681@qq.com 微信：codehelp
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