文档介绍：Intermediate Macroeconomics
Lecture 17
Microeconomics behind Macroeconomics
Consumption
Investment
Money S and D
Advances in business cycle model
Consumption
Keynes & C function
Fisher & intertemporal choice
Life-cycle hypothesis
Permanent hypothesis
Random-walk hypothesis
Pull of instant gratification
Keynes & consumption function
Marginal propensity to consume (0<c<1)
marginal consumption/marginal e
Average propensity to consume (↓as Y↑)
total consumption/total e
Interest does not affect consumption
Keynes & consumption function
Y
C
APC
MPC
1
1
Keynes & consumption function
A dire prediction:
as Y grew, households would consume a smaller and smaller fraction of Y & save more and more. There might not be enough profitable investment projects to absorb S.
Keynes & consumption function
If so, the low C would lead to an inadequate D for g&s, resulting in a depression once the wartime D for the government ceased. (secular stagnation: long depression of indefinite duration)
Keynes & consumption function
Simon s
Constructed aggregate data on C and Y from 1869-1940s
Although Y increased dramatically, APC was stable from decade to decade
Keynes & consumption function
The consumption puzzle
Household and SR data (OK)
LR (APC is constant)
1950s, Modigliani & Friedman
Fisher & intertemporal choice
intertemporal choice