nicholson微观经济理论（答案+PPT+习题库）-ch17.pptVIP

Chapter 17 CAPITAL MARKETS Capital The capital stock of an economy is the sum total of machines, buildings, and other reproducible resources in existence at a point in time these assets represent some part of the economy’s past output that was not consumed, but was instead set aside for future production Rate of Return Rate of Return The single period rate of return (r1) on an investment is the extra consumption provided in period 2 as a fraction of the consumption forgone in period 1 Rate of Return Rate of Return The perpetual rate of return (r?) is the permanent increment to future consumption expressed as a fraction of the initial consumption foregone Rate of Return When economists speak of the rate of return to capital accumulation, they have in mind something between these two extremes a measure of the terms at which consumption today may be turned into consumption tomorrow Rate of Return andPrice of Future Goods Assume that there are only two periods The rate of return between these two periods (r) is defined to be Rate of Return andPrice of Future Goods The relative price of future goods (p1) is the quantity of present goods that must be foregone to increase future consumption by one unit Demand for Future Goods An individual’s utility depends on present and future consumption U = U(c0,c1) and the individual must decide how much current wealth (w) to devote to these two goods The budget constraint is w = c0 + p1c1 Utility Maximization Utility Maximization The individual consumes c0* in the present period and chooses to save w - c0* to consume next period This future consumption can be found from the budget constraint p1c1* = w - c0* c1* = (w - c0*)/p1 c1* = (w - c0*)(1 + r) Intertemporal Impatience Individuals’ utility-maximizing choices over time will depend on how they feel about waiting for future consumption Assume that an individual’s utility function for consumption [U(c)] is the same for both periods but period 1’s utility is discounted by a