多恩布什,中级宏观经济学.pdfVIP

Lecture two demand-side equilibrium equilibrium Income and the interest rate in the product market ● product market basic identity: y c y −t y +i +g (1) ( ( )) ① total expenditure as a function of income equals income ② level of investment are exogenous and given. ● Investment demand and the interest rate The level of fixed investment planned by a firm might depend on the market interest rate. ① intuitively, interest rate is the cost of investment. ② Present discounted value theory ′ So, we get the simplest investment model: i i r ,i 0 . Substituting it into the original ( ) equilibrium equation gives us the product-market equilibrium condition, y c y =−t y +i r +g (4) ( ( ) ( )) ● Derivation of the IS curve The IS curve represents the pairs of r and y that will keep the product market in equilibrium, in the sense that planned investment plus government purchases equals planned saving plus tax revenue at that level of income. Equation (4) is the IS curve. Fig4-4, IS curve is a downward curve. Three methods ① graphically, fig4-3 and fig 4-4 ② mathematically, differentiating equation (4), hold g is fixed. ③ Four-quadrant diagram in figure 4-5 ● Shifting the IS curve The four-quadrant diagram is useful for studying the effects of changes in exogenous variables like g, or shifts in the investment, saving, or tax functions on the product-market equilibrium r and y levels. Fig4-5 shifts in the saving Fig4-6 change of government purchase equilibrium Income and the interest rate in the mone