Macro Economic | Yiming Shi

1.1. Chapter1 宏观经济学概述

1.1.1. 宏观经济学的产生与发展概述

1.1.2. 宏观经济学的基本概念

1.1.3. 国内生产总值及其核算方法

GDP（Gross Demostic Production） $Y = C + I + NX + G$ GDP = private consumption + gross private investment + government investment + government spending + (exports – imports).

1.1.4. 其他宏观经济指标

Consumer Price Index

This index can also be used to calculate the $inflation$:

\[inflation\ rate\ in\ year2 = \frac{CPI year2 - CPI year1}{CPI year1}\times 100\]

which is constucted of a basket of goods and services. problems:

substitution bias
introduction of new goods
unmeasured quanlity change

K:capital L:labor

The production function

$Y = F(K,L)$

AK模型

Solow模型： $Y = Af(\frac{K}{L})$ or $Y=Af(k)$ :where k is tech fixed factor supplies and fixed tech.

Determing GDP:$Y=F(\hat{K},\hat{L})$

Constant returns to scale

decreasing returns to scale
increasing returns to scale
- if technology is fixed, then $K = \hat{K},L = \hat{L}$

W R P

W: nominal wage R: nominal rental rete P: price of output W/P: real wage R/P: real rental rate

Marginal product of labor

$MPL = F(K,L+1)-F(K,L)$

Diminishing marginal returns

while K is fixed and L is increasing

fewer machines per worker
lower worker producting cause marginal product decreasing

the firms should hire worker s.t. $MPL = \frac{W}{P}$

diminishing the rental rate

Same logic: $MPK = \frac{R}{P}$

The neoclassical theory of distribution

1.2. Chapter2 商品市场

Types of Financial institution and their function

Financial Institution

the Bond Market
- Term
- Credit Risk:Probability of default
the Stock Market
Financial immediaries
- bank
- mutual funds

1.2.1. 消费

1.2.2. 储蓄与投资

Saving V.S. Investment Saving:

buy stocks

Investment:

buying a house

Assumption

As is known:

\[Y = C + I + G + NX\]

Assumpting NX = 0 then:

\[Y-C-G = I\] \[(Y-T-C)+(T-G) = I\]

where T is Taxes and $(Y-T-C)$ is private saving $(T-G)$ is public saving when $T-G <0$ $\to$ Budget Deficit when $T-G > 0$ $\to$ Budget Supplies

1.2.3. 商品市场均衡

How the financial system candinate saving & investment?

The Market for Loanable Funds

which y-axis is Interest rate and x-axis is Loanable Funds Supply = Saving Demand = Investment

How government policies affect saving, investment and the interest rate?

by using Taxes

Saving incentive (S moves to right)
Investment incentive (D moves to right)
Government budget deficits or surpluses (S moves to left or right)

1.3. Chapter3 货币市场

1.3.1. 货币简介

What is money?

123 points

Money Functions?Types of money

medium of exchange
unit of account
store of value
liquidity
Commodity money
- with instrinct money
fiat money
- with govn power

Money Stock

currency
demand deposit

Measurement

$M_1 : currency + Demand$ $M_2: M_1 + savings + mutual funds$

For China

There exists $M_0,M_1,M_2$

1.3.2. 现代金融系统和货币政策

1.3.3. 中央银行与货币政策

Banlc and money supply. How banks create money?

Fractional reserve Banking
- reserve ratio
- reserve requirement
- excess reserve

How does the central bank control the money supply

\[Money supply = (Initial Doposit\times \frac{1}{1-R})\]

Money Multiplier

\[= \frac{Money Supply}{Initial Doposit} = \frac{1}{R}\]

Reserve Rate

Reserve Rate
- paying interest on reserves
  - high -> less money supply
  - low -> more money supply
Discount Rate
- high -> less money supply
- low -> more money supply

1.3.4. 货币数量论

How close the MS affect infiation and nominal interest rate?

The classic theory of infiation

Money supply:vertical
Money demand:downward sloping
- interest rate
- the average level of price

Two conclusion:

The quantity of money determines the price level

\[Price Level = Nominal GDP / Real GDP\]

The growth of money avaiable determines inflation rate

The Velocity and quantity equation

Velocity of money(V)

Rate at which money changes hands

\[V = (P\times Y)/M\]

where P = Price level (GDP deflator) Y = nominal GDP M = money supply

Quantity equation

\[M\times V = P\times Y\]

The infiation Tax

The fisher effect

\[\frac{1+i}{1+\pi} = 1+r\] \[\to i = r+\pi\]

where $i = nominal rate$ $r = real rate$ $\pi = inflation rate$

1.4. Chapter4 总需求与总供给

1.4.1. IS-LM模型

1.4.2. AD-AS模型

aggregate-demand curve

\[Y = C + I + G + NX\]

for long run where: $C : wealth$ $I:interest rate$ $NX:exchange rate$ $G: assumpted policy fixed$ downward slope

aggregate-supply curve
Services&products upward slope

Natural level of output(might shift right)

in short run:

labor
capital
natural resource
technological knowledge

Short run about AS curve

shifts depends on:

Sticky wage theory

expected theory

Sticky-price theory

expected price(about goods&services)
- adjusted to macro economics condition(unexpected)

Misperceptions theory

unexpeted price of overall level might mislead supplies

\[Quantity\ of\ output\ supplied = Natural\ level\ of\ output + a(real\ price-expected\ price)\]

1.4.3. 财政政策和货币政策的影响

Economics Fluctuations

Three fluctuations
- short run
- medium run
- long run
Three variables
- real GDP
- Invest Spending
- Unemployment rate

For short/long run

Economics fluctuations in long run

classic dichotomy & monetary neotrality
- affect price & other nominal variables
- not affect real GDP
in short run
- push the real GDP away

1.5. Chapter5 失业与通货膨胀

1.5.1. 失业

How is unemployment measured

Labor Force Statistics

unemployment rate(u-rate)
- = $100\times \frac{unemployment}{labor force}$
Labor-Paticipation Rate(LFP-rate)
- = $100\times \frac{labor force}{population}$