宏觀經(jīng)濟(jì)學(xué)課件 CHAP03

MACROECONOMICS?2010WorthPublishers,allrightsreservedSEVENTHEDITIONPowerPoint?SlidesbyRonCronovichN.GregoryMankiwCHAPTERNationalIncome:WhereitComesFromandWhereitGoes3ModifiedforEC204byBobMurphyInthischapter,youwilllearn:whatdeterminestheeconomy’stotaloutput/incomehowthepricesofthefactorsofproductionaredeterminedhowtotalincomeisdistributedwhatdeterminesthedemandforgoodsandserviceshowequilibriuminthegoodsmarketisachievedCHAPTER3

NationalIncomeOutlineofmodelAclosedeconomy,market-clearingmodelSupplysidefactormarkets(supply,demand,price)determinationofoutput/incomeDemandsidedeterminantsofC,I,andGEquilibriumgoodsmarketloanablefundsmarket3CHAPTER3

NationalIncomeFactorsofproductionK=

capital:

tools,machines,andstructuresusedinproductionL=

labor:

thephysicalandmentaleffortsofworkers4CHAPTER3

NationalIncomeTheproductionfunction:Y=F(K,L)showshowmuchoutput(Y

)

theeconomycanproducefrom

K

unitsofcapitalandL

unitsoflaborreflectstheeconomy’sleveloftechnologyexhibitsconstantreturnstoscale5CHAPTER3

NationalIncomeReturnstoscale:AreviewInitiallyY1

=F

(K1

,

L1)Scaleallinputsbythesamefactorz:

K2=zK1andL2=zL1

(e.g.,ifz=1.2,thenallinputsareincreasedby20%)Whathappenstooutput,Y2=F(K2,

L2

)?Ifconstantreturnstoscale,Y2=zY1

Ifincreasingreturnstoscale,Y2>zY1

Ifdecreasingreturnstoscale,Y2<zY1

6CHAPTER3

NationalIncomeReturnstoscale:Example1constantreturnstoscaleforanyz>07CHAPTER3

NationalIncomeReturnstoscale:Example2decreasingreturnstoscaleforanyz>18CHAPTER3

NationalIncomeReturnstoscale:Example3increasingreturnstoscaleforany

z>19CHAPTER3

NationalIncomeAssumptionsTechnologyisfixed.Theeconomy’ssuppliesofcapitalandlaborarefixedat10CHAPTER3

NationalIncomeDeterminingGDPOutputisdeterminedbythefixedfactorsuppliesandthefixedstateoftechnology:11CHAPTER3

NationalIncomeThedistributionofnationalincomedeterminedbyfactorprices,

thepricesperunitfirmspayforthefactorsofproductionwage=priceofLrentalrate=priceofK12CHAPTER3

NationalIncomeNotationW

=nominalwageR

=nominalrentalrateP

=priceofoutputW

/P

=realwage

(measuredinunitsofoutput)R

/P

=realrentalrate13CHAPTER3

NationalIncomeHowfactorpricesaredeterminedFactorpricesaredeterminedbysupplyanddemandinfactormarkets.Recall:Supplyofeachfactorisfixed.Whataboutdemand?14CHAPTER3

NationalIncomeDemandforlaborAssumemarketsarecompetitive:

eachfirmtakesW,R,andPasgiven.Basicidea:

Afirmhireseachunitoflabor

ifthecostdoesnotexceedthebenefit.cost=realwagebenefit=marginalproductoflabor15CHAPTER3

NationalIncomeMarginalproductoflabor(MPL

)definition:

Theextraoutputthefirmcanproduce

usinganadditionalunitoflabor

(holdingotherinputsfixed):

MPL=F

(K,

L

+1)–

F

(K,

L)16CHAPTER3

NationalIncomeYoutputMPLandtheproductionfunctionLlabor1MPL1MPL1MPLAsmorelaborisadded,MPL↓SlopeoftheproductionfunctionequalsMPL17CHAPTER3

NationalIncomeDiminishingmarginalreturnsAsafactorinputisincreased,

itsmarginalproductfalls(otherthingsequal).Intuition:

Suppose↑LwhileholdingKfixed?fewermachinesperworker?lowerworkerproductivity18CHAPTER3

NationalIncomeMPLandthedemandforlaborEachfirmhireslabor

uptothepointwhereMPL=W/P.UnitsofoutputUnitsoflabor,LMPL,LabordemandRealwageQuantityoflabordemanded19CHAPTER3

NationalIncomeTheequilibriumrealwageTherealwageadjuststoequate

labordemandwithsupply.UnitsofoutputUnitsoflabor,LMPL,LabordemandequilibriumrealwageLabor

supply20CHAPTER3

NationalIncomeDeterminingtherentalrateWehavejustseenthatMPL=W/P.ThesamelogicshowsthatMPK=R/P:diminishingreturnstocapital:MPK

↓asK

↑TheMPKcurveisthefirm’sdemandcurve

forrentingcapital.FirmsmaximizeprofitsbychoosingK

suchthatMPK=R/P.21CHAPTER3

NationalIncomeTheequilibriumrealrentalrateTherealrentalrateadjuststoequate

demandforcapitalwithsupply.UnitsofoutputUnitsofcapital,KMPK,demandforcapitalequilibriumR/PSupplyofcapital22CHAPTER3

NationalIncomeTheNeoclassicalTheoryofDistributionstatesthateachfactorinputispaiditsmarginalproductagoodstartingpointforthinkingaboutincomedistribution23CHAPTER3

NationalIncomeHowincomeisdistributedtoLandKtotallaborincome=Ifproductionfunctionhasconstantreturnstoscale,thentotalcapitalincome=labor

incomecapital

incomenational

income24TheratiooflaborincometototalincomeintheU.S.,1960-2007Labor’sshareoftotalincomeLabor’sshareofincome

isapproximatelyconstantovertime.

(Thus,capital’sshareis,too.)CHAPTER3

NationalIncomeTheCobb-DouglasProductionFunctionTheCobb-Douglasproductionfunctionhasconstantfactorshares:

α=capital’sshareoftotalincome:capitalincome=MPKxK=α

Ylaborincome=MPLxL=(1–α)YTheCobb-Douglasproductionfunctionis:

whereArepresentstheleveloftechnology.26CHAPTER3

NationalIncomeTheCobb-DouglasProductionFunctionEachfactor’smarginalproductisproportionaltoitsaverageproduct:27CHAPTER3

NationalIncomeLaborproductivityandwagesTheory:wagesdependonlaborproductivityU.S.data:periodproductivitygrowthrealwagegrowth1959-20072.1%2.0%1959-19732.8%2.8%1973-19951.4%1.2%1995-20072.5%2.4%28CHAPTER3

NationalIncomeOutlineofmodelAclosedeconomy,market-clearingmodelSupplysidefactormarkets(supply,demand,price)determinationofoutput/incomeDemandsidedeterminantsofC,I,andGEquilibriumgoodsmarketloanablefundsmarketDONEDONE

Next29CHAPTER3

NationalIncomeDemandforgoods&servicesComponentsofaggregatedemand:C=consumerdemandforg&sI=demandforinvestmentgoodsG=governmentdemandforg&s

(closedeconomy:noNX)30CHAPTER3

NationalIncomeConsumption,Cdef:Disposableincomeistotalincomeminustotaltaxes:Y–T.Consumptionfunction:C=C

(Y–T

)

Showsthat↑(Y–T

)?

↑C

def:Marginalpropensitytoconsume(MPC)

isthechangeinCwhendisposableincomeincreasesbyonedollar.31CHAPTER3

NationalIncomeTheconsumptionfunctionCY–TC

(Y–T)1MPCTheslopeoftheconsumptionfunctionistheMPC.32CHAPTER3

NationalIncomeInvestment,ITheinvestmentfunctionisI

=I

(r

),

whererdenotestherealinterestrate,

thenominalinterestratecorrectedforinflation.Therealinterestrateisthecostofborrowingtheopportunitycostofusingone’sownfundstofinanceinvestmentspending

So,↑r

?

↓I

33CHAPTER3

NationalIncomeTheinvestmentfunctionrII

(r

)Spendingoninvestmentgoods

dependsnegativelyontherealinterestrate.34CHAPTER3

NationalIncomeGovernmentspending,GG=govtspendingongoodsandservices.Gexcludestransferpayments

(e.g.,socialsecuritybenefits,

unemploymentinsurancebenefits).Assumegovernmentspendingandtotaltaxesareexogenous:35CHAPTER3

NationalIncomeThemarketforgoods&servicesAggregatedemand:

Aggregatesupply:

Equilibrium:

Therealinterestrateadjusts

toequatedemandwithsupply.36CHAPTER3

NationalIncomeTheloanablefundsmarketAsimplesupply-demandmodelofthefinancialsystem.Oneasset:“l(fā)oanablefunds”demandforfunds:

investmentsupplyoffunds:

saving“price”offunds:

realinterestrate37CHAPTER3

NationalIncomeDemandforfunds:InvestmentThedemandforloanablefunds…comesfrominvestment:

Firmsborrowtofinancespendingonplant&equipment,newofficebuildings,etc.Consumersborrowtobuynewhouses.dependsnegativelyonr,

the“price”ofloanablefunds

(costofborrowing).38CHAPTER3

NationalIncomeLoanablefundsdemandcurverII

(r

)Theinvestmentcurveisalsothedemandcurveforloanablefunds.39CHAPTER3

NationalIncomeSupplyoffunds:SavingThesupplyofloanablefundscomesfromsaving:Householdsusetheirsavingtomakebankdeposits,purchasebondsandotherassets.Thesefundsbecomeavailabletofirmstoborrowtofinanceinvestmentspending.Thegovernmentmayalsocontributetosaving

ifitdoesnotspendallthetaxrevenueitreceives.40CHAPTER3

NationalIncomeTypesofsavingprivatesaving

=(Y–T

)–Cpublicsaving

=T–Gnationalsaving,S

=privatesaving+publicsaving=(Y–T)–C+T–G

=Y–C–G41CHAPTER3

NationalIncomeNotation:

Δ=changeinavariableForanyvariableX,ΔX=“thechangeinX”

ΔistheGreek(uppercase)letterDeltaExamples:IfΔL=1andΔK=0,thenΔY=MPL. Moregenerally,ifΔK=0,thenΔ(Y?T)

=ΔY?

ΔT,so

ΔC =MPC×

(ΔY?

ΔT) =MPC

ΔY?

MPC

ΔT42CHAPTER3

NationalIncomeBudgetsurplusesanddeficitsIfT>G,budgetsurplus

=(T–G

)

=publicsaving.IfT<G,budgetdeficit

=(G–T

)

andpublicsavingisnegative.IfT=G

,“balancedbudget,”publicsaving=0.TheU.S.governmentfinancesitsdeficitbyissuingTreasurybonds–i.e.,borrowing.43U.S.FederalGovernmentSurplus/Deficit,1940-2007U.S.FederalGovernmentDebt,

1940-2007Fact:Intheearly1990s,about18centsofeverytaxdollarwenttopayinterestonthedebt.

(In2007,itwasabout10cents)CHAPTER3

NationalIncomeLoanablefundssupplycurverS,INationalsavingdoesnotdependonr,

sothesupplycurveisvertical.46CHAPTER3

NationalIncomeLoanablefundsmarketequilibriumrS,II

(r

)EquilibriumrealinterestrateEquilibriumlevelofinvestment47CHAPTER3

NationalIncomeThespecialroleofrradjuststoequilibratethegoodsmarketandtheloanablefundsmarketsimultaneously:

IfL.F.marketinequilibrium,then

Y–C–G

=I

Add(C

+G

)tobothsidestoget

Y=C+I+G

(goodsmarketeq’m)Thus,Eq’minL.F.marketEq’mingoodsmarket48CHAPTER3

NationalIncomeDigression:MasteringmodelsTomasteramodel,besuretoknow:1.

Whichofitsvariablesareendogenousandwhichareexogenous.2.

Foreachcurveinthediagram,know:a.

definitionb.

intuitionforslopec.

allthethingsthatcanshiftthecurve3.

Usethemodeltoanalyzetheeffectsofeachitemin2c.49CHAPTER3

NationalIncomeMasteringtheloanablefundsmodelThingsthatshiftthesavingcurvepublicsavingfiscalpolicy:changesinGorTprivatesavingpreferencestaxlawsthataffectsaving401(k)IRAreplaceincometaxwithconsumptiontax50CHAPTER3

NationalIncomeCASESTUDY:

TheReagandeficitsReaganpoliciesduringearly1980s:increasesindefensespending:ΔG>0bigtaxcuts:ΔT<0Bothpoliciesreducenationalsaving:51CHAPTER3

NationalIncomeCASESTUDY:

TheReagandeficitsrS,II

(r

)r1I1r22. …whichcausestherealinterestratetorise…I23. …whichreducesthelevelofinvestment.1. Theincreaseinthedeficitreducessaving…52CHAPTER3

NationalIncomeArethedataconsistentwiththeseresults?

variable

1970s

1980s

T–G

–2.2

–3.9

S

19.6

17.4

r

1.1

6.3

I

19.9

19.4T–G,S,andIareexpressedasapercentofGDPAllfiguresareaveragesoverthedecadeshown.53CHAPTER3

NationalIncomeMasteringtheloanablefundsmodel,continuedThingsthatshifttheinvestmentcurve:sometechnologicalinnovationstotakeadvantagesomeinnovations,

firmsmustbuynewinvestmentgoodstaxlawsthataffectinvestmente.g.,investmenttaxcredit54CHAPTER3

NationalIncomeAnincreaseininvestmentdemandAnincrease

indesiredinvestment…rS,II1I2r1r2…raisestheinterestrate.Buttheequilibriumlevelofinvestmentcannotincreasebecausethe

supplyofloanable

fundsisfixed.55CHAPTER3

NationalIncomeSavingandtheinterestrateWhymightsavingdependonr?Howwouldtheresultsofanincreaseininvestmentdemandbedifferent?Wouldrriseasmuch?WouldtheequilibriumvalueofIchange?56CHAPTER3

NationalIncomeAnincreaseininvestmentdemandwhensavingdependsonrrS,II(r)I(r)2r1r2Anincreaseininvestmentdemandraisesr,whichinducesanincreaseinthequantityofsaving,whichallowsI

toincrease.I1I257CHAPTER3

NationalIncomeFYI:Markets,Intermediaries,the2008CrisisIntherealworld,firmshaveseveraloptionsforraisingfundstheyneedforinvestment,including:borrowfrombankssellbondstosaverssellsharesofstock(ownership)tosaversThefinancialsystemincludes:bondandstockmarkets,wheresaversdirectlyprovidefundstofirmsforinvestmentfinancialintermediaries,e.g.banks,insurancecompanies,mutualfunds,wheresaversindirectlyprovidef