Finance:DAD–SAS model

The DAD–SAS model is a macroeconomic model based on the AD-AS model but that looks at the different incomes at different inflation levels.

DAD curve

The DAD (Dynamic aggregate demand) curve is in the long run a horizontal line called the EAD (Equilibrium aggregate Demand) curve. The short run DAD curve at flexible exchange rates is given by the equation:

$\pi =\mu -bY+b{Y}_{-1}+h(\mathrm{\Delta }{i}^W+\mathrm{\Delta }{ϵ}^e)$

The short run DAD curve at fixed exchange rates is given by the equation:

$\pi =ϵ+{\pi }^W-bY+b{Y}_{-1}+\gamma \mathrm{\Delta }{Y}^W+\delta \mathrm{\Delta }G-f(\mathrm{\Delta }{i}^W+\mathrm{\Delta }{ϵ}^e)$

SAS curve

The SAS (Surprise aggregate supply) curve is in the long run a vertical line called the EAS (Equilibrium aggregate Supply) curve. The short run SAS curve is given by the equation:

$\pi ={\pi }^e+\lambda (Y-Y*)$

de:DAD-SAS-Modell