宏观经济学课件(第17章-消费).pptVIP

* * * Similar to Figure 16-8 on p. 445. * (Figure 16-9, panel (a), on p.446) In this case, the consumer optimally was not going to borrow, so his inability to borrow has no impact on his choices. * (Figure 16-9, panel (b), on p.446) In this case, the consumer would like to borrow to achieve his optimal consumption at point D. If he faces a borrowing constraint, though, then the best he can do is at point E. If you have a few minutes of classtime available, have your students do the following experiment: (This is especially useful if you have recently covered Chapter 15 on Government Debt) Suppose Y1 is increased by $1000 while Y2 is reduced by $1000(1+r), so that the present value of lifetime income is unchanged. Determine the impact on C1 - when consumer does not face a binding borrowing constraint - when consumer does face a binding borrowing constraint Then relate the results to the discussion of Ricardian Equivalence from Chapter 15. Note that the intertemporal redistribution of income in this exercise could be achieved by a debt-financed tax cut in period 1, followed by a tax increase in period 2 that is just sufficient to retire the debt. In the text, pages 446-447 contain a case study on the high Japanese saving rate that relates to the material on borrowing constraints just covered. * * The initial wealth could be zero, or could be a gift from parents to help the consumer get started on her own. * * * * The middle of page 452 gives two hypothetical examples that help students understand the concepts of permanent and transitory income. * * * * * * This result is important because many policies affect the economy by influencing consumption and saving. For example, a tax cut to stimulate aggregate demand only works if consumers respond to the tax cut by increasing spending. The R-W Hypothesis implies that consumption will respond only if consumers had not anticipated the tax cut. This result also implies that consumption will res