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lectures/unpleasant.md

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@@ -162,7 +162,7 @@ By an **open market operation**, we mean a government monetary policy action in
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## Algorithm (basic idea)
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We work backwards from $t=T$ and first compute $p_T, R_u$ associated with the low-inflation, low-inflation-tax-rate stationary equilibrium of our lecture on the dynamic Laffer curve for the inflation tax.
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We work backwards from $t=T$ and first compute $p_T, R_u$ associated with the low-inflation, low-inflation-tax-rate stationary equilibrium in {doc}`money_inflation_nonlinear`.
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To start our description of our algorithm, it is useful to recall that a stationary rate of return
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on currency $\bar R$ solves the quadratic equation
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Quadratic equation {eq}`eq:up_steadyquadratic` has two roots, $R_l < R_u < 1$.
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For reasons described at the end of *this lecture*, we select the larger root $R_u$.
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For reasons described at the end of {doc}`money_inflation`, we select the larger root $R_u$.
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Next, we compute
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## Example Calculations
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We'll set parameters of the model so that the steady state after time $T$ is initially the same
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as in our lecture on "Money and Inflation".
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as in {doc}`money_inflation_nonlinear`
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In particular, we set $\gamma_1=100, \gamma_2 =50, g=3.0$. We set $m_0 = 100$ in that lecture,
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but now the counterpart will be $M_T$, which is endogenous.
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plot_path([80, 100], msm)
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```
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Figure {numref}`fig:unpl1` summarizes outcomes of two experiments that convey messages of
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{numref}`fig:unpl1` summarizes outcomes of two experiments that convey messages of
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Sargent and Wallace's **unpleasant monetarist arithmetic** {cite}`sargent1981`.
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* An open market operation that reduces the supply of money at time $t=0$ reduces the price level at time $t=0$

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