tailieunhanh - Macroeconomic theory and policy phần 2

Tham khảo tài liệu 'macroeconomic theory and policy phần 2', kinh doanh - tiếp thị, quản trị kinh doanh phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả | Chapter 2 Basic Neoclassical Theory Introduction In this chapter we develop a simple theory based on the neoclassical perspective that is designed to explain the determination of output and employment hours worked . The object is to construct a model economy populated by individuals that make certain types of decisions to achieve some specified goal. The decisions that people make are subject to a number of constraints so that inevitably achieving any given goal involves a number of trade-offs. In many respects the theory developed here is too simple and suffers from a number of shortcomings. Nevertheless it will be useful to study the model since it serves as a good starting point and can be extended in a number of dimensions as the need arises. For the time being we will focus on the output of consumer goods and services hence ignoring the production of new capital goods or investment . so that I 0. For simplicity we will focus on an economy in which labor is the only factor of production Appendix extends the model to allow for the existence of a productive capital stock . For the moment we will also abstract from the government sector so that G 0. Finally we consider the case of a closed economy no international trade in goods or financial assets so that NX 0. From our knowledge of the income and expenditure identities it follows that in this simple world C Y L. In other words all output is in the form of consumer goods purchased by the private sector and all claims to output are paid out to labor. A basic outline of the neoclassical model is as follows. First it is assumed that individuals in the economy have preferences defined over consumer goods and services so that there is a demand for consumption. Second individuals also have preferences defined over a number of nonmarket goods and services that are produced in the home sector . leisure . Third individuals are endowed 21 22 CHAPTER 2. BASIC NEOCLASSICAL THEORY with a fixed amount of time .