tailieunhanh - Lecture Macroeconomics: Lecture 24 - Prof. Dr.Qaisar Abbas

Lecture 24: Investment - I. After studying this chapter you will be able to understand: leading theories to explain each type of investment, why investment is negatively related to the interest rate, things that shift the investment function. | Review of the previous lecture Relative to GDP, the . government’s debt is moderate compared to other countries 2. Standard figures on the deficit are imperfect measures of fiscal policy because they are not corrected for inflation do not account for changes in govt assets omit some liabilities (. future pension payments to current workers) do not account for effects of business cycles 0 Review of the previous lecture 3. In the traditional view, a debt-financed tax cut increases consumption and reduces national saving. In a closed economy, this leads to higher interest rates, lower investment, and a lower long-run standard of living. In an open economy, it causes an exchange rate appreciation, a fall in net exports (or increase in the trade deficit). 4. The Ricardian view holds that debt-financed tax cuts do not affect consumption or national saving, and therefore do not affect interest rates, investment, or net exports. 1 Review of the previous lecture Most economists oppose a | Review of the previous lecture Relative to GDP, the . government’s debt is moderate compared to other countries 2. Standard figures on the deficit are imperfect measures of fiscal policy because they are not corrected for inflation do not account for changes in govt assets omit some liabilities (. future pension payments to current workers) do not account for effects of business cycles 0 Review of the previous lecture 3. In the traditional view, a debt-financed tax cut increases consumption and reduces national saving. In a closed economy, this leads to higher interest rates, lower investment, and a lower long-run standard of living. In an open economy, it causes an exchange rate appreciation, a fall in net exports (or increase in the trade deficit). 4. The Ricardian view holds that debt-financed tax cuts do not affect consumption or national saving, and therefore do not affect interest rates, investment, or net exports. 1 Review of the previous lecture Most economists oppose a strict balanced budget rule, as it would hinder the use of fiscal policy to stabilize output, smooth taxes, or redistribute the tax burden across generations. 6. Government debt can have other effects: may lead to inflation politicians can shift burden of taxes from current to future generations may reduce country’s political clout in international affairs or scare foreign investors into pulling their capital out of the country 2 Lecture 24 Investment - I Instructor: Prof. Dr. Qaisar Abbas 3 This chapter sets up the IS-LM model, which chapter 11 then uses extensively to analyze the effects of policies and economic shocks. This chapter also introduces students to the Keynesian Cross and Liquidity Preference models, which underlie the IS curve and LM curve, respectively. If you would like to spend less time on this chapter, you might consider omitting the Keynesian Cross, instead using the loanable funds model from Chapter 3 to derive the IS curve. Advantage: students are already .

• Kinh tế học
• Lecture Macroeconomics
• Principles of microeconomics
• Economic models
• Science of macroeconomics
• Tools of microeconomics
• Microeconomic transactions
• Bài giảng Kinh tế vĩ mô
• Kinh tế vĩ mô
• Data of macroeconomics
• Unemployment rate
• Inflation rate
• Natural rate of unemployment
• Consumer price index
• National income
• Agriculture sector
• Agricultural policies
• Economic fluctuations
• Macroeconomic policy
• Business cycle theory