宏观经济学课件(第17章消费).ppt

* * * * Note: Keynes conjectured that the interest rate matters for consumption only in theory. In Fisher’s theory, the interest rate doesn’t affect current consumption if the income and substitution effects are of equal magnitude. After you have shown and explained this slide, it would be useful to pause for a moment and ask your students (perhaps working in pairs) to do the analysis of an increase in the interest rate on the consumption choices of a borrower. In that case, the income effect tends to reduce both current and future consumption, because the interest rate hike makes the borrower worse off. The substitution effect still tends to increase future consumption while reducing current consumption. In the end, current consumption falls unambiguously; future consumption falls if the income effect dominates the substitution effect, and rises if the reverse occurs. * * * 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