经济学基础ppt课件.ppt

12 SHORT-RUN ECONOMIC FLUCTUATIONS33Part1:IS-LM Model and AD-AS ModelThe origin of IS-LM modelIS-LM model is about the simultaneously equilibriums of goods(services)markets and asset market.I:Investment;S:Saving;L:Money demanded;M:Money supplied.The IS-LM model was developed in 1937 by Nobel laureate John Hicks,who intended it as a graphical representation of the ideas of Keynes.The important assumption:the economy is closed.The IS curve:equilibrium in the goods and services marketFigure1 Deriving the IS curve:Real interest rate,rReal interest rate,rSaving,S;Investment,IOutput,YS1:Y=4000S2:Y=5000IDDFF7%7%5%5%40005000ISThe IS curve:equilibrium in the goods and services marketIn the left-hand side,it is a determined process of real interest rate and money demanded.In this process,a change of output Y brings a corresponding shift of saving curve,which then result in a new equilibrium.The IS curve:equilibrium in the goods and services marketThe implication of IS curve:IS curve shows the real interest rate,r,for which the goods market is in equilibrium;so,at all points on the IS curve desired investment equals desired national saving.In general,because a rise in output increases desired national saving,thereby reducing the real interest rate that clears the goods market,the IS curve slopes downward.Factors that shift the IS curve:The IS curve:equilibrium in the goods and services marketAn increase inShifts the IS curveReasonExpectedfuture outputUpS(C),rWealthUpS(C),rGovernment purchases,GUpS(demand for goods),rTaxes,TNo changeor downNo change:Ricardian equivalenceDown:no R.E.，C,S,rMPK？Expected tax rate on capital？The IS curve:equilibrium in the goods and services marketFigure2 Effect on the IS curve of a temporary increase in government purchases:Real interest rate,rReal interest rate,rOutput,YS2S1IFFEE7%6%4500IS1Saving,S;Investment,IIS2Increase in GThe IS curve:equilibrium in the goods and services marketIn summary,for constant output,any change in the economy that reduces desired national saving relative to desired investment will increase the real interest rate that clears the goods market and thus shift the IS curve up.The LM curve:Asset market equilibriumFigure3 Deriving the LM curve:assumption-P constantReal interest rate,rReal interest rate,rOutput,YAA7%5%40005000ISBCCReal money supply,MSReal money demand,MD(Y=5000)MD(Y=4000)LMReal money supply,M/P,Real money demand Md/PThe LM curve:Asset market equilibriumThe implication of LM curve:LM curve shows the real interest rate,r,for which the asset market is in equilibrium;so,at all points on the LM curve desired money demand equals desired money supply.In general,because a rise in output increases desired money demand,thereby increasing the real interest rate that clears the asset market,the LM curve slopes upward.The LM curve:Asset market equilibriumThe money demand function:Md=P*L(Y,r+e):Nominal demand or Md/P=L(Y,r+e):Real demand.The LM curve:Asset market equilibriumAdjust process:AB CThe price of a nonmonetary asset and its nominal interest rate(and then real interest rate)are negatively related,why?In point B,there are excess demand for money,people will try to sell a portion of their nonmonetary assets for money,which will lead the prices of these assets to fall,and then the real interest rates on these assets to rise.The LM curve:Asset market equilibriumFactors that shift the LM curve:An increase inShifts the LM curveReasonNominal moneySupply,MDownM/P,rPrice level,PUpM/P,rExpected inflation,eDownMd/P ,rNominal interest rateon money,imUpMd/P ,rWealth？The efficiency of payment technologies？The liquidity of alternative assets？The LM curve:Asset market equilibriumFigure4 An increase in the real money supply shifts the LM curve downReal interest rate,rReal interest rate,rOutput,YAA3%2%4000ISDD MS1MD(Y=4000)LM(M/P=1200)Real money supply,M/P,Real money demand Md/P LM(M/P=1000)Real money supply increases MS23%2%Real money supply increasesThe LM curve:Asset market equilibriumFigure5 An increase in real money demand shifts the LM curve upReal interest rate,rReal interest rate,rOutput,YAA6%3%4000ISGGMSMD1LM1Real money supply,M/P,Real money demand Md/PIS LM2Real money demand increasesReal money demand increasesMD26%3%General equilibrium in the complete IS-LM modelFigure6 IS-LM model:Real interest rate,rOutput,YLM curveIS curveY0r0General equilibrium in the complete IS-LM modelr0 is the real interest rate which makes goods market and asset market to be simultaneously in equilibrium.r0 is not determinated by IS and LM.From IS-LM to Aggregate DemandThe aggregate demand curve shows the relation between the aggregate quantity of goods demanded,C+I+G,and price level,P.The aggregate demand curve slopes downward,as does the demand curve for a single product.From IS-LM to Aggregate DemandFigure7 Derivation of the aggregate demand curveLM1(P=P1)LM2(P=P2)ISFEEFP1P2r2r1Y1Y1Y2Y2ADReal interest rate,rPrice level,POutput,YOutput,YFrom IS-LM to Aggregate DemandFigure8 The effect of an increase in government purchases on the aggregate demand curve.LMIS1FEEFP1r2r1Y1Y1Y2Y2AD1Real interest rate,rPrice level,POutput,YOutput,YIS2Government purchases increaseAD2From IS-LM to Aggregate DemandFactors That Shift the AD Curve For a constant price level,any factor that shifts the intersection of the IS and LM curves to the right increases aggregate output demanded and shifts the AD curve to the right,include:An increase in expected future output;An increase in wealth;An increase in government purchases,G;A reduction in taxes,T(assuming no Ricardian equivalence so that consumers respond by raising desired consumption);An increase in the expected future MPK;and A reduction in the effective tax rate on capital.From IS-LM to Aggregate DemandFactors That Shift the AD CurveFactors that shift the LM curve down and to the right,and thus shift the AD curve to the right,include:An increase in the nominal money supply,M;A rise in expected inflation,e;A decrease in the nominal interest rate on money,im;andAny other change that reduces the real demand for money.IS-LM Model:Keynesian vs.Classical MacroeconomicsThe important assumption of Keynesian macroeconomics is that the price level is fixed.While the assumption of Classical economists is that wages and prices move rapidly to clear markets.However,the conventional IS-LM model may be easily adapted to allow for rapidly adjusting wages and prices.Thus the IS-LM framework also may be used to present and discuss the classical approach to business cycle analysis.