Dynamic model of Economic Growth with Variable Time Diskret Fiscal and Monetary Policy.

Abstract

This paper is a scientific analysis on how fiscal and monetary policies affect economic growth (related to the amount of money and consumption). Model is essentially a budget constraint the household sector for the period of time. Budget constraints that made equality of conditions that describes the ability of households and the government to pay for the expenses / pay off debts. Objective function that optimized is a function which is the utility function of consumption and real money. Then conducted a qualitative analysis on the optimal trajectory for the influence of nominal interest rates and inflation on the dynamics of consumption and real money demand (the case of Bernoulli type utility function). Finally, I analyze the influence of several fiscal and monetary decisions on the optimal trajectory. The results form an objective function that is affected by the level of inflation. Keywords: Economic Growth, Fiscal Policy, Monetary Policy, Maximum Principles.