CHAP18Investment培训资料.pptVIP

MACROECONOMICS © 2010 Worth Publishers, all rights reserved S E V E N T H E D I T I O N PowerPoint® Slides by Ron Cronovich N. Gregory Mankiw C H A P T E R Investment 18 Modified for EC 204 by Bob Murphy In this chapter, you will learn: leading theories to explain each type of investment why investment is negatively related to the interest rate things that shift the investment function why investment rises during booms and falls during recessions 3 CHAPTER 18 Investment Three types of investment Business fixed investment:businesses’ spending on equipment and structures for use in production. Residential investment:purchases of new housing units (either by occupants or landlords). Inventory investment:the value of the change in inventories of finished goods, materials and supplies, and work in progress. U.S. Investment and its components, 1970-2009 Billions of 2005 dollars 5 CHAPTER 18 Investment Understanding business fixed investment The standard model of business fixed investment: the neoclassical model of investment Shows how investment depends on: MPK interest rate tax rules affecting firms 8 CHAPTER 18 Investment Factors that affect the rental price For the Cobb-Douglas production function, the MPK (and hence equilibrium R/P ) is The equilibrium R/P would increase if: ↓K (e.g., earthquake or war) ↑L (e.g., pop. growth or immigration) ↑A (technological improvement, or deregulation) 9 CHAPTER 18 Investment Rental firms’ investment decisions Rental firms invest in new capital when the benefit of doing so exceeds the cost. The benefit (per unit capital): R/P, the income that rental firms earn from renting the unit of capital to production firms. 10 CHAPTER 18 Investment The cost of capital Components of the cost of capital: interest cost: i ×PK, where PK = nominal price of capital depreciation cost: δ ×PK, where δ = rate of depreciation capital loss: − ΔPK  (a capital gain, ΔPK 0, reduces cost of K ) The total cost