宏观经济学课件 Chapter17

CHAPTER17Consumption®MANKIW'SMACROECONOMICSMODULESAPowerPointTutorialToAccompany

MACROECONOMICS,7th.EditionN.GregoryMankiwTutorialwrittenby:MannigJ.SimidianB.A.inEconomicswithDistinction,DukeUniversityM.P.A.,HarvardUniversityKennedySchoolofGovernmentM.B.A.,MassachusettsInstituteofTechnology(MIT)SloanSchoolofManagementJohnMaynardKeynesTheconsumptionfunctionwascentraltoKeynes’theoryofeconomicfluctuationspresentedinTheGeneralTheoryin1936.Keynesconjecturedthatthemarginalpropensitytoconsume—theamountconsumedoutofanadditionaldollarofincomeisbetweenzeroandone.Heclaimedthatthefundamentallawisthatoutofeverydollarofearnedincome,peoplewillconsumepartofitandsavetherest.Keynesalsoproposedtheaveragepropensitytoconsume,the

ratioofconsumptiontoincomefallsasincomerises.Keynesalsoheldthatincomeistheprimarydeterminantofconsumptionandthattheinterestratedoesnothaveanimportantrole.TheConsumptionFunctionConsumptionspendingbyhouseholdsdependsonautonomousconsumptionmarginalpropensitytoconsume(MPC)disposableincomeC=C+c

Y,

C>0,0<c<1CYCCdeterminestheinterceptontheverticalaxis.Theslopeoftheconsumptionfunctionislowercasec,theMPC.C=C+c

Y

TheAveragePropensitytoConsumeCYCAPC=C/Y=C/Y+c11APC1APC2ThisconsumptionfunctionexhibitsthreepropertiesthatKeynesconjectured.First,themarginalpropensitytoconsumecisbetweenzeroandone.Second,theaveragepropensitytoconsumefallsasincomerises.Third,consumptionisdeterminedbycurrentincomeY.AsYrises,C/Yfalls,andsotheaveragepropensitytoconsumeC/Yfalls.Noticethattheinterestrateisnotincludedinthisequationasadeterminantofconsumption.TheMarginalPropensitytoConsumeTounderstandthemarginalpropensitytoconsume(MPC),considerashoppingscenario.ApersonwholovestoshopprobablyhasalargeMPC,let’ssay(.99).Thismeansthatforeveryextradollarheorsheearnsaftertaxdeductions,heorshespends$.99ofit.TheMPCmeasuresthesensitivityofthechangeinonevariable,consumption,withrespecttoachangeintheothervariable,income.SecularStagnation,DuringWorldWarII,onthebasisofKeynes’sconsumptionfunction,economistspredictedthattheeconomywouldexperiencewhattheycalledsecularstagnation—alongdepressionofinfiniteduration—unlessthegovernmentusedfiscalpolicytostimulateaggregatedemand.ItturnedoutthattheendofthewardidnotthrowtheUnitedStatesintoanotherdepression,butitdidsuggestthatKeynes’sconjecturethattheaveragepropensitytoconsumewouldfallasincomeroseappearednottohold.SimonKuznetsconstructednewaggregatedataonconsumptionandinvestmentdatingbackto1869.HisworkwouldlaterearnhimaNobelPrize.Kuznetsdiscoveredthattheratioofconsumptiontoincomewasstableovertime,despitelargeincreasesinincome;again,Keynes’sconjecturewascalledintoquestion.Thisbringsustothepuzzle…Thefailureofthesecular-stagnationhypothesisandthefindingsofKuznetsbothindicatedthattheaveragepropensitytoconsumeisfairlyconstantovertime.Thispresentedapuzzle:WhydidKeynes’sconjecturesholdupwellinthestudiesofhouseholddataandinthestudiesofshorttime-series,butfailwhenlong-timeserieswereexamined?CYShort-runconsumptionfunction(fallingAPC)Long-runconsumptionfunction(constantAPC)Studiesofhouseholddataandshorttime-seriesfoundarelationshipbetweenconsumptionandincomesimilartotheoneKeynesconjectured—thisiscalledtheshort-runconsumptionfunction.But,studiesusinglongtime-seriesfoundthattheAPCdidnotvarysystematicallywithincome—thisrelationshipiscalledthelong-runconsumptionfunction.ConsumptionPuzzleIrvingFisherandIntertemporalChoiceTheeconomistIrvingFisherdevelopedthemodelwithwhicheconomistsanalyzehowrational,forward-lookingconsumersmakeintertemporalchoices—thatis,choicesinvolvingdifferentperiodsoftime.Themodelilluminatestheconstraintsconsumersface,thepreferencestheyhave,andhowtheseconstraintsandpreferencestogetherdeterminetheirchoicesaboutconsumptionandsaving.Whenconsumersaredecidinghowmuchtoconsumetodayversushowmuchtoconsumeinthefuture,theyfaceanintertemporalbudgetconstraint,whichmeasuresthetotalresourcesavailableforconsumptiontodayandinthefuture.Hereisaninterpretationoftheconsumer’sbudgetconstraint:Theconsumer’sbudgetconstraintimpliesthatiftheinterestrateiszero,thebudgetconstraintshowsthattotalconsumptioninthetwoperiodsequalstotalincomeinthetwoperiods.Intheusualcaseinwhichtheinterestrateisgreaterthanzero,futureconsumptionandfutureincomearediscountedbyafactorof1+r.Thisdiscountingarisesfromtheinterestearnedonsavings.Becausetheconsumerearnsinterestoncurrentincomethatissaved,futureincomeisworthlessthancurrentincome.Also,becausefutureconsumptionispaidforoutofsavingsthathaveearnedinterest,futureconsumptioncostslessthancurrentconsumption.Thefactor1/(1+r)isthepriceofsecond-periodconsumptionmeasuredintermsoffirst-periodconsumption;itistheamountoffirst-periodconsumptionthattheconsumermustforgotoobtain1unitofsecond-periodconsumption.Herearethecombinationsoffirst-periodandsecond-periodconsumptiontheconsumercanchoose.IfhechoosesapointbetweenAandB,heconsumeslessthanhisincomeinthefirstperiodandsavestherestforthesecondperiod.IfhechoosesbetweenAandC,heconsumesmorethathisincomeinthefirstperiodandborrowstomakeupthedifference.TheConsumer'sBudgetConstraintFirst-periodconsumptionSecond-periodconsumptionConsumer’sbudgetconstraintSavingBorrowingACBHorizontalinterceptisY1+Y2/(1+r)Verticalinterceptis(1+r)Y1+Y2Y1Y2ConsumerPreferencesTheconsumer’spreferencesregardingconsumptioninthetwoperiodscanberepresentedbyindifferencecurves.Anindifferencecurveshowsthecombinationoffirst-periodandsecond-periodconsumptionthatmakestheconsumerequallyhappy.Theslopeatanypointontheindifferencecurveshowshowmuchsecond-periodconsumptiontheconsumerrequiresinordertobecompensatedfora1-unitreductioninfirst-periodconsumption.Thisslopeisthemarginalrateofsubstitutionbetweenfirst-periodconsumptionandsecond-periodconsumption.Ittellsustherateatwhichtheconsumeriswillingtosubstitutesecond-periodconsumptionforfirst-periodconsumption.First-periodconsumptionSecond-periodconsumptionWZXYIC1IC2Indifferencecurvesrepresenttheconsumer’spreferencesoverfirst-periodandsecond-periodconsumption.Anindifferencecurvegivesthecombinationsofconsumptioninthetwoperiodsthatmaketheconsumerequallyhappy.HigherindifferencescurvessuchasIC2arepreferredtoloweronessuchasIC1.TheconsumerisequallyhappyatpointsW,X,andY,butpreferspointZtoalltheothers.PointZisonahigherindifferencecurveandisthereforenotequallypreferredtoW,X,andY.ConsumerPreferencesFirst-periodconsumptionSecond-periodconsumptionOIC1IC2Theconsumerachieveshishighest(oroptimal)levelofsatisfactionbychoosingthepointonthebudgetconstraintthatisonthehighestindifferencecurve.Heretheslopeoftheindifferencecurveequalstheslopeofthebudgetline.Attheoptimum,theindifferencecurveistangenttothebudgetconstraint.TheslopeoftheindifferencecurveisthemarginalrateofsubstitutionMRS,andtheslopeofthebudgetlineis1+therealinterestrate.AtpointO,MRS=1+r.IC3OptimizationHowChangesinIncomeAffectConsumptionFirst-periodconsumptionSecond-periodconsumptionOIC1IC2Anincreaseineitherfirst-periodincomeorsecond-periodincomeshiftsthebudgetconstraintoutward.Ifconsumptioninperiodoneandconsumptioninperiodtwoarebothnormalgoods—thosethataredemandedmoreasincomerises,thisincreaseinincomeraisesconsumptioninbothperiods.HowChangesintheRealInterestRateAffectConsumptionEconomistsdecomposetheimpactofanincreaseintherealinterestrateonconsumptionintotwoeffects:anincomeeffectandasubstitutioneffect.Theincomeeffectisthechangeinconsumptionthatresultsfromthemovementtoahigherindifferencecurve.Thesubstitutioneffectisthechangeinconsumptionthatresultsfromthechangeintherelativepriceofconsumptioninthetwoperiods.First-periodconsumptionSecond-periodconsumptionBIC1IC2ACAnincreaseintheinterestraterotatesthebudgetconstraintaroundthepointC,whereCis(Y1,Y2).Thehigherinterestratereducesfirstperiodconsumption(movetopointA)andraisessecond-periodconsumption(movetopointB).NewbudgetconstraintOldbudgetconstraintY1Y2Theinabilitytoborrowpreventscurrentconsumptionfromexceedingcurrentincome.AconstraintonborrowingcanthereforebeexpressedasC1<Y1.Thisinequalitystatesthatconsumptioninperiodonemustbelessthanorequaltoincomeinperiodone.Thisadditionalconstraintontheconsumeriscalledaborrowingconstraint,orsometimes,aliquidityconstraint.Theanalysisofborrowingleadsustoconcludethattherearetwoconsumptionfunctions.Forsomeconsumers,theborrowingconstraintisnotbinding,andconsumptioninbothperiodsdependsonthepresentvalueoflifetimeincome.Forotherconsumers,theborrowingconstraintbinds.Hence,forthoseconsumerswhowouldliketoborrowbutcannot,consumptiondependsonlyoncurrentincome.ConstraintsonBorrowingFrancoModiglianiandtheLife-CycleHypothesisInthe1950s,FrancoModigliani,Ando,andBrumbergusedFisher’smodelofconsumerbehaviortostudytheconsumptionfunction.Oneoftheirgoalswastostudytheconsumptionpuzzle.AccordingtoFisher’smodel,consumptiondependsonaperson’slifetimeincome.

Modiglianiemphasizedthatincomevariessystematicallyoverpeople’slivesandthatsavingallowsconsumerstomoveincomefromthosetimesinlifewhenincomeishightothosetimeswhenincomeislow.Thisinterpretationofconsumerbehaviorformedthebasisofhislife-cyclehypothesis.MiltonFriedmanandthePermanent-IncomeHypothesisIn1957,MiltonFriedmanproposedthepermanent-incomehypothesistoexplainconsumerbehavior.Itsessenceisthatcurrentconsumptionisproportionaltopermanentincome.Friedman’spermanent-incomehypothesiscomplementsModigliani’slife-cyclehypothesis:bothuseFisher’stheoryoftheconsumertoarguethatconsumptionshouldnotdependoncurrentincomealone.Butunlikethelife-cyclehypothesis,whichemphasizesthatincomefollowsaregularpatternoveraperson’slifetime,thepermanent-incomehypothesisemphasizesthatpeopleexperiencerandomandtemporarychangesintheirincomesfromyeartoyear.FriedmansuggestedthatweviewcurrentincomeYasthesumoftwocomponents,permanentincome

YPandtransitoryincome

YT.RobertHallandtheRandom-WalkHypothesisRobertHallwasfirsttoderivetheimplicationsofrationalexpectationsforconsumption.Heshowedthatifthepermanent-in