Consider the following shocks in the two-period model with money. Suppose there is an impatience shock...

Consider the following shocks in the two-period model with money.
Suppose there is an impatience shock that causes the discount factor ? to decrease.
i. What are the e?ects on the competitive equilibrium? Explain in words and with diagrams.

ii. Explain the extent to which the model driven by an impatience shock can or cannot replicate the key business cycle facts (see Chapter 3 for a review!). Be sure to reference which speci?c facts the model can or cannot explain

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