北京大学中级微观经济学课件英文.pptVIP

* 1 Shandong University Intermediate Microeconomics Yue QIAO Yue QIAO 2 Shandong University Contents Intertemporal Choice Asset Markets Uncertainty Yue QIAO 3 Shandong University Intertemporal Choice ? Budget constraint (1) (m1,m2) money in each time period is endowment, allow the consumer to borrow and lend at rate r (2) c2 = m2 + (1 + r)(m1 ? c1) (3) note that this works for both borrowing and lending, as long as it is at the same interest rate (4) various forms of the budget constraint: future value, present value (5) preferences — convexity and monotonicity are very natural Yue QIAO 4 Shandong University Intertemporal Choice Yue QIAO 5 Shandong University Intertemporal Choice ? Comparative statics (1) if consumer is initially a lender and interest rate increases, he remains a lender. Yue QIAO 6 Shandong University Intertemporal Choice ? Comparative statics (2) a borrower is made worse off by an increase in the interest rate Yue QIAO 7 Shandong University Intertemporal Choice ? Comparative statics (3) Slutsky allows us to look at the effect of increasing the price of today’s consumption (increasing the interest rate) a) change in consumption today when interest rate increases = substitution effect + (m1 ? c1) income effect b) assuming normality, an increase in interest rate lowers current consumption for a borrower, and has an ambiguous effect for lender c) provide intuition Yue QIAO 8 Shandong University Intertemporal Choice ? Inflation Yue QIAO 9 Shandong University Intertemporal Choice ? Present value (1) if the consumer can borrow and lend freely, then she would always prefer a consumption pattern with a greater present value. (2) Use of present value: the one correct way to rank investment decisions; linear operation, so relatively easy to calculate ? Bonds ? Installment loans Yue QIAO 1