Chapter 13 Compared Static Analysis of Aggregate Demand Disequilibrium Theory 复学济器院 Chapter 13 Slide 1
Chapter 13 Slide 1 Chapter 13 Compared Static Analysis of Aggregate Demand & Disequilibrium Theory 0 10 20 30 40 90 91 92 93 94 95 96 97 98 99 00
Content ■ A simple closed model a The static solution of simple model a Basic concepts of disequilibrium theory 复表经济学院
Content ◼ A simple closed model ◼ The static solution of simple model ◼ Basic concepts of disequilibrium theory
13.1 Simple Closed Model ■ Simple closed model ● without import and export。 ● The model as follow: income equation: Z=C+l+G consumption function: C=C(r) investment function: I=I(,r) conditionis of financial market equilibriu m Y-Y rate of the increase of price: =HG)+I P equilibrium cond itions: Z=Y 复表经济学院
13.1 Simple Closed Model ◼Simple closed model ⚫without import and export。 ⚫The model as follow: equilibrium Z Y Y Y Y H P P rate L Y i P M onditionis nvestment I I Y r onsumption C C Y income Z C I G = + − = = = = = + + − − ： ： ： ： ： ： conditions of the increase of price ( ) c of financial market' equilibriu m ( , ) i function ( , ) c function ( ) equation .
13.1 Simple Closed Model ■Simp| e closed model aWe can know the characters of some macroeconomic variables based on microeconomics income equation: Z=C+I+G dc MPC: CY ∈ dy Investment: orSO, <0 OL OL demand of money: Ly 0,L <0 aY the relation between nominal rate and real rate r=i-n 复表经济学院
13.1 Simple Closed Model ◼Simple closed model ◼We can know the characters of some macroeconomic variables based on microeconomics： = − = = = = = = + + the r i i L L Y L demand L r I I Y I investment I dY dC MPC C income Z C I G Y i Y r Y ： ： ： ： ： relation between nominal rate and real rate of money 0, 0 0, 0; (0,1); equation
13. 1 Simple Closed Model ■ Simple closed model ● The nature of rate eGeneral knowledge: rate is a opportunity cost of lending, a kind price of money, a compensate for giving up liquidity of money mIcroeconomic knowledge: the time preference for family is just the rate for firm. The real rate is the difference between nominal rate and expectation of the rate of inflation 大学经济学院
13.1 Simple Closed Model ◼Simple closed model ⚫The nature of rate ◆General knowledge：rate is a opportunity cost of lending, a kind price of money, a compensate for giving up liquidity of money ◆Microeconomic knowledge：the time preference for family is just the rate for firm. The real rate is the difference between nominal rate and expectation of the rate of inflation
13.1 Simple Closed Model ■ Simple closed model ● Aggregate demand income equation: Z=C+I+G do MPC: CY ∈(0,1) OⅠ investment: Iy >0.I <0, aY lemand for mone:WD0≈oL <0 复表经济学院
13.1 Simple Closed Model ◼Simple closed model ⚫Aggregate demand： 0, 0 0, 0; (0,1); equation = = = = = = + + i L L Y L demand for money L r I I Y I investment I dY dC MPC C income Z C I G Y i Y r Y ： ： ： ：
13.1 Simple Closed Model ■ Simple closed mode ● Aggregate supply: Y-Y H Y Y-Y GDP gap H: general function relation; real rate of inflation; TI:expectation of rate of inflation 复表经济学院
13.1 Simple Closed Model ◼Simple closed model ⚫Aggregate supply： _ 1 _ _ _ ( ) real rate of inflation ex of Y Y P H P Y Y Y GDP gap Y H general function relation P P pectation of rate inflation • − • − = − − ： ； ： ； ： ； ：
13.1 Simple Closed Model ■ Simple closed model OWhat is gdp gap: . The GDP gap is the difference between real rate of inflation and the expectation of ◆ H-function: kEynes school: H is a almost horizontal line ONew-classical school:H is a vertical line 复表经济学院
13.1 Simple Closed Model ◼Simple closed model ⚫What is GDP gap： ◆The GDP gap is the difference between real rate of inflation and the expectation of ◆H-function： Keynes school: H is a almost horizontal line。 New-classical school: H is a vertical line
Principle of Price from: Yuan zhigang“ Macroeconomics”p.320 P Change price for long run A t+1 复具学经济学院
Principle of Price from: Yuan zhigang “Macroeconomics”p.320 P t t t+1 A Change in price for long run
13.1 Simple Closed Model aSimple closed model ■ Short run:P= constant,P≠0 ◆ variables:Y,r,C,l, OLong run: P=variables, P 复表经济学院
13.1 Simple Closed Model ◼Simple closed model ◼Short run：P=constant， ◆variables：Y，r，C，I， ⚫Long run：P=variables， 0 • P • P