全球视角宏观经济学课件glnt.pptx

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1、Macroeconomics In The Global EconomyWei wei Shool of Economics and FinanceJiaotong UniversityChapter 1 IntroductionlThe approach of MacroeconomicslSome of the key questions addressed by macroeconomicslMacroeconomics in historical perspectivelProviding a broader framework for macroeconomic analysisTh

2、e approach of Macroeconomics lWhat is macroeconomics?Macroeconomics is the study of aggregate behavior in an economy.While the economic life of a country depends on millions of individual actions taken by business firms,consumers,workers,and government officials,macroeconomics focuses on the overall

3、 consequences of these individual actions.For example,prices-price index.lThe approach of MacroeconomicslThe basic approach of Macroeconomics is to look at the overall trends in the economy.lSpecial summary measures of economic activity-GNP,the saving rate,or the consumer price index-give the“big pi

4、cture”of changes and trends.lThese overall macroeconomic measures provide the basic equipment that allows macroeconomists to focus on the dominant changes in the economy.l How do economists do their job?l First,try to understand on a theoretical level the decision processes of individual firms and h

5、ouseholds.lSecond,try to explain the overall behavior of the economy by aggregating,or adding up,all the decisions of the individual households and firms in the economy.lThird,giving empirical content to theory by collecting and analyzing actual macroeconomic data.Some of the key questions addressed

6、 by macroeconomicslThe most important single measure of production in the economy is the GNP.l Economic growth and business cycleslUnemployment is a second key variable that macroeconomics investigates.lA third key variable that interests macroeconomists is the inflation rate.lThe fourth major varia

7、ble that macroeconomists look at is the trade balance.Macroeconomics in historical perspectivelThe creation of macroeconomics Economic statisticians began to collect and systematize aggregate data which provided the scientific basis for macroeconomic investigations.The careful identification of busi

8、ness cycle as a recurrent economic phenomenon.The Great Depression A new theoretical framework to explain the Great Depression proposed by Keynes.lThe development of macroeconomicsl Keynesian and neo-Keynesianl Main ideal Keyness policy recommendation is the major tool of promoting economic growth.l

9、 Non-Keynesianl In fact,to many economists,it began to appear that stabilization policies were actually a major source of renewed instability.l A“counterrevolution”began.l Monetarism and its central idea.l New classical macroeconomics:Lucas and Barro.l Advocates of the real business-cycle theory.Pro

10、viding a broader framework for macroeconomic analysislThe general theory is limited to short-term economic fluctuations and stabilization policies.lOur analysis is pushed further by providing an especially broad view of macroeconomics.l Beside the attention on short-term economic fluctuations and st

11、abilization policies,we focus more a t t e n t i o n o n o t h e r c e n t r a l c o n c e r n s o f macroeconomics,such as the determination of economic growth rate,or balance of payment,etc.l Considerable attention has been given to the differences in economic institutions in different countries i

12、n order that we discover a more general macroeconomic theory.Chapter 2 Basic Concepts in MacroeconomicslLooking at different measures of aggregate income and outcome and their interrelationship.lThe process of aggregating across many different goods and services requires some common unit of measure:

13、the role of price and price indexes.lA subject that permeates much of discussion in macroeconomics:Flows and Stocks lTwo factors that influence the Intertemporal decisions of economic agents:Interest Rates and Present Value.lAnother factor that is vital in understanding decision making across time p

14、eriods:expectations GDP and GNPlWhat are GDP and GNP?lHow to calculate them?l interrelationship of theml GNP=GDPNFPlGNP per capita and economic well-being Real Versus Nominal VariableslThe construction of price indexesl Consumer price index or consumer price deflatorl Pct=w1(P1tP10)+w2(P2t P20)+WN(P

15、Nt PN0)l Ct=nominal consumption expenditure Pctl =Pct Ct Pctl Deflator for investment spending(PI),government spending(PG),exports(PX),and imports(Pm)lReal GDPlTo calculate real production,we think of the GDP of the economy as equal to the product of“average”price level in the economy,multiplied by

16、the level of real production in the economy.l GDP=PQlHow to calculate Q?l We start with the definition of Nominal GDP as the sum of final expenditures throughout the economy.l Then,we use the price indexes for consumption,investment,government spending,exports and imports to calculate a time series

17、of real expenditures for each of these categories.l Finally,we can get Q by adding up the sum of final expenditures of these categories.lHow can we get P?l Once getting real GDP,Q,then we can compute the GDP price deflator P using the formula as follow:l P=GDPQlGenerally,we get Real GDP by using the

18、 formula as follow:l Q=GDP PFlows and Stocks in MacroeconomylA flow is an economic magnitude measured as a rate per unit of time.lA stock is an economic magnitude measured at a point of time.lInvestment and the capital stocklSaving and wealthlThe current account and net international investment posi

19、tionlDeficit and the stock of public debtSome Intertemporal Aspects of Macroeconomics:Interest Rates and Present ValueslMany key macroeconomics issues involve choices that not only take place in time but that involve decisions about timing.We call the choices involve later as intertemporal choice.lT

20、wo crucial elements in the analysis of intertemporal decisionsl Interest rates and net present valueslUsing interest rates,we can translate a given time path of money in the future into a present value today.an economic magnitude measured The Role of ExpectationlAt the time that economic agents make

21、 intertemporal choices,they are generally uncertain about the future,so they have to formulate some expectations about the future.lHow do economic agents actually formulate their expectations?lStatic expectationsl Next year is going to be like this year.lAdaptive expectationsl Individuals update the

22、ir expectations about future depending on the extent to which their expectations about present period turned out to be wrong.lRational expectationl Individuals make efficient use of all available information.l What economic model the individuals is using and just what economic information he or she

23、has at hand.Chapter 3 Output Determination:Introducing Aggregate Supply and Aggregate DemandlMacroeconomics as the study of economic fluctuationslThe Determination of aggregate supplylThe classical approach to aggregate supplylThe Keynesian approach to aggregate supplylThe determination of aggregate

24、 demandlEquilibrium of aggregate supply and aggregate demandlAggregate supply and demand in the short run and the long runMacroeconomics as the study of economic fluctuationslEconomic fluctuations have been a central concern of macroeconomicslEconomic fluctuations:output and employment fluctuations

25、lUnemployment ratelPotential output,current output and output gapl When employment fluctuates,so does output,since output is produced using labor inputs.Just as we measure the extent to which employment falls short of the full-employment level,we also can measure the extent to which output falls sho

26、rt of the level that would be produced if all labor were fully employed.l Economic performance is not only measured in terms of the general trend of output,but also in terms of whether the output gap is increasing or decreasing.l Okuns lawl There is a great regularity that a reduction of unemploymen

27、t of 1 percent of labor force in the US was associated with a rise in GNP and fall in the output gap of 3 percent.lBusiness cyclel Unlike periods of sustained unemployment,business cycles represent shorter-term fluctuations of output and employment,typically lasting 3-4 years.l A key feature of busi

28、ness cycles is that important macroeconomic variables-output,prices,investment,business profits,and various monetary variables-tend to move together in a systematic fashion.The Determination of aggregate supplylAggregate supplyl Definitionl Aggregate supply is the total amount of output that firms a

29、nd households choose to provide,given the pattern of wages and prices in the economy.lOptimal supply decisionl In fact,supply decision bases not only on current wages and prices,but also on expectations about future wages and prices.lFormulation of aggregate supplylThe Formulation of aggregate suppl

30、y is complicated by the fact that there are many kinds of goods in the economy,produced by a very large number of firms and households.lOur theoretical framework ignores these complications and assumes that the economy produces a single output.lThe production Functionl QQ(K,L,)lIn the equation,outpu

31、t is a function of the capital and labor used in production and of the state of technology.lThe production function has two characteristics:l An increase in the amount of any input will make output go up.l We assume that the marginal productivity of each factor declines as more of that factor is use

32、d with a fixed amount of the other factor.l BQ=(K0,L)QLQQ(K1K0)Q(K1)LMPLLMPL(K0)MPL(K1 K0)(a)Production function(b)Marginal productivity of labor lThe demand for labor and the output supply functionl The firm should hire labor until the marginal product of labor input equals the real wage.w/p,MPL (w

33、/p)a (w/p)bLaLbLl We can summarize these findings by writing the demand for labor as a function of real wage and the levels of capital and technology:l LD=LD(w/P,K,)l Using the labor-demand schedule.We can now derive an output supply schedule which shows the amount of output the profit-maximizing fi

34、rm will supply at each level of w/p,K,and.l Q QS S=Q=QS S LD(w/P,K,)，K,l Note that QS is a negative function of w/p for an“indirect”reason.l Note also that QS is a positive function of K and,for direct and indirect reasons.l More simply,output supply is a negative function of w/p and a positive func

35、tion of K and:l Q QS S=Q=QS S(w/P,K,)lThe Supply of Laborl The supply schedule for labor,LS Sl Labor-supply decision:Household must choose between supplying labor and enjoying leisure,the so-called Labor-leisure decision.l Assumptions l A worker must choose only between labor and leisure and in whic

36、h he consumes all his wage earnings,which are his only source of income.l The worker can choose to work any number of hours per day.l UL=UL(C,L)l CLUL2UL1UL0LC0LC1 C0ABlHow much labor and consumption workers actually choose depends both on the utility function and on the real wage level.C0=(w/p)0 C1

37、=3(w/p)0CLZ1(w/p)1(w/p)0 Z0(w/p)0 123CLUL2UL1Z1(w/p)1 Z2(w/p)2 C2C1(w/p)L(w/p)1(w/p)2L 1L 2lSubstitution effect and Income effectl Substitution effect means that each hour of leisure represents a greater amount of forgone consumption of goods when the real wage goes up.With leisure more expensive,ho

38、useholds“substitute”away from it and choose longer working hours.l Income effect works to reduce labor supply when wages increase.l The effect of a rise in wages on the supply of labor is theoretically ambiguous:the substitution effect tends to increase L,the income effect tends to decrease L.The re

39、lative influence of these two effects depends on household preferences.The Classical Approach to Aggregate SupplylWe already derived the Aggregate supply function,the demand for labor,and the supply of labor.Now we combine these and summarize the results in an aggregate supply curve.lThe Main idea o

40、f classical approachl For any price level,the nominal wage is fully flexible and adjusts to keep the supply of labor and the demand for labor equilibrated.Thus,the real wage is determined so as to clear the labor market.QLQfQ(K0,L)(w/p)LLfLDLSPQQSlDeriving the aggregate supply curvel How does the su

41、pply of aggregate output respond when the price level increase?lQlL(w/p)lLlPlQlUnemployment in the classical approachl Amendments to the basic modell One amendment allows for the fact that some people may choose voluntarily to be unemployed,at least for short periods of time.l A second amendment emp

42、hasizes that various forces in the labor market-laws,institutions,traditions-may prevent the real wage from moving to its full-employment level.If the real wage is stuck above the full-employment level,the unemployment results.lThe Keynesian approach to aggregate supplyl Assumption:Nominal wages and

43、 prices do not adjust quickly to maintain labor-market equilibrium.l Sticky wagesl Long-term labor contractsl As the price level(P)rises,the real wage falls,the desired level of labor input goes up,the desired level of output supply also rises.As a result,the aggregate supply curve is upward sloping

44、.l l Involuntary unemploymentl Involuntary unemployment is that some people who are willing to work at the wage received by other workers of comparable ability cannot do so.l Why does involuntary unemployment arise?l Nominal wage rigidity(Keynesian)l Real wage rigidity(classical theory)lAggregate Su

45、pply:a summaryl classical aggregate supplyl Keynesian aggregate supplyl extreme Keynesian aggregate supplylQslQslQslPlQlQlQlThe determination of aggregate demandl The equilibrium level of output and the price level over an entire economy is determined by the interaction of aggregate supply and aggre

46、gate demand.l The structure of aggregate demand with a closed economyl QD=C+I+Gl Aggregate demand curvel Real Balance Effectl One immediate effect of a price increase is to reduce the real value of money held by the public.l If people hold a given amount of currency and bank balances and the price l

47、evel rises,they will be able to buy fewer goods with their money.l lPlQlBlAlP1lP0lQD1lQD0lIn an open economy,aggregate demand is the total amount of domestic goods demanded at the given level of prices by both domestic and foreign purchasers.l The aggregate demand schedule in the open economy is sti

48、ll down-word-slope.lIn the open economy,as in the closed economy,a rise in the price level tends to cause a fall in aggregate demand.l A rise in domestic prices compared with foreign prices makes it more expensive to buy domestic goods and relatively less expensive to buy foreign goods.lThe Equilibr

49、ium of Aggregate Supply And Aggregate DemandlThe aggregate supply-aggregate demand framework is useful apparatus for determining the equilibrium of output and the price level.We can use this framework to study the effects of specific economic policies as well as of external shocks on the equilibrium

50、 levels of Q and P.l Output market equilibrium is given by the intersection of the aggregate demand curve and aggregate supply schedule.This equilibrium will also determine the level of employment in the economy.lEquilibrated level of output does not signify the optimal level of output.There might b