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微观经济
这是一篇英文的微观经济知识思维导图，主要包括expamsionary fiscal policy、Government budget、contractionary fiscal policy等内容。
编辑于2021-10-30 09:44:04- 人微观经济
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Fiscal policy
expamsionary fiscal policy
expamsionary fiscal policy consist of
increasing government spending
1一定时期:现期生产 2最终产品:不是二手，不是证券 3市场价值:不是自给自足，不是黑市 4价值:GDP=产量·价格
decreasing personal income taxes
decreasing business taxes
a combination of increasing spending and decreasing taxes
Government budget
Government revenue
Frome the sale of government owned(state-owned)enterprises,or property
Government expenditure
current expenditures
day-to-day items
capital expenditures
public investments physical capital
transfer payments
government to households
no good or service
in return
contractionary fiscal policy
contractionary fiscal policy
decreasing government spending
increasing personal income taxes
increasing business taxes
a combination of decreasing spending and increasing taxes
Inflation targeting
Introduction of inflation targeting
We have seen how monetary policy may be used as a stabilization tool, focusing on the goals of full employment and a low and stable rate of inflation. However, in recent years more and more central banks around the world are trying a kind of monetary policy that aims at maintaining a particular targeted rate of inflation (for example, Australia, Brazil, Canada, Chile, Finland, Israel, Mexico, New Zealand, Norway, Sweden, Switzerland, the United Kingdom, the European Union and many others).
What is inflation targeting?
The International Monetary Fund (IMF) defines inflation targeting as: ‘... the public announcement of medium-term numerical targets for inflation with an institutional commitment by the monetary authority to achieve these targets. Additional key features include increased communication with the public and the markets about the plans and objectives of monetary policymakers and increased accountability of the central bank for attaining its inflation objectives.’
Many countries pursuing inflation targeting usually have targets of between 1.5% and 2.5%, with one percentage point above and below as a ‘tolerance’ margin. While the central bank is committed to pursuing the inflation target, it is free to determine what policy tools it will use to achieve it.
To achieve an inflation target, central banks use monetary policy: If predicted inflation is higher than the target, they use contractionary policy to increase interest rates and lower aggregate demand, thus lowering the rate of inflation. 预测结果“高于”目标通胀率，采取紧缩性货币政策； If predicted inflation is lower than the target, they use expansionary policy to lower interest rates and increase aggregate demand, thus increasing the rate of inflation. 预测结果“低于”目标通胀率，采取扩张性货币政策； If predicted inflation equal to the target, policy remain unchanged. 预测结果“接近”目标通胀率，货币政策保持不变。
Advantages of inflation targeting
A ‘lower’rate of inflation
Improved ability to anticipate future Inflation rate
Greater co-ordination between monetary & fiscal policy
Greater central bank transparency & accountability
Disadvantages of inflation targeting
Reduced ability of the central bank topursue 'other macroeconomic objectives’
Reduced ability of the central bank torespond to 'supply-side shocks’
Reduced ability of the central bank to dealwith 'unexpected events’
Finding an appropriate inflation target
Difficulties of implementation
Evaluating monetary policy
Strengths of monetary policy
Relatively quick implementation;
Central bank independence
No political constraints
No crowding out
Ability to adjust interest rates incrementally (in small steps)
Weaknesses of monetary policy
Time lags
Possible ineffectiveness in recession
Conflict between government objectives
Inability to deal with stagflation
DEMAND-SIDE & SUPPLY-SIDE POLICIE
Taxes of all types
Both direct & indirect taxes are the most important source of government revenues.
Direct taxes
Direct taxes are taxes paid directly to the government tax authorities by the taxpayer.
The most important kinds of direct taxes include the following: Personal income taxes 个人所得税; Corporate income taxes 企业所得税; Wealth taxes 财富税; Social insurance (social security) contributions o payroll taxes.
The revenue collected from all of the above forms of taxation is paid into the government’s budget 政府预算, and is used to finance a broad variety of government expenditures.
Indirect taxes
Indirect taxes are taxes on spending on goods & services, they are called indirect because, while consumers are the ultimate payers of a part or all of these taxes, they pay indirectly through the suppliers of the good or service purchased (the suppliers may be the producers, the retailers, or generally the sellers).
The most important kinds of indirect taxes include the following: General expenditure taxes, also known as sales taxes 营业税; Excise taxes 消费税; Customs duties, also known as tariffs 关税.
Demand-side policies
Objectives of demand-side policies
Demand-side policies, also known as demand management, focus on changing aggregate demand, or shifting the aggregate demand curve in the AD-AS model, to achieve the goals of price stability, full employment and economic growth (increases in potential GDP).
Additional information
AD is influenced by automatic stabilizers 自动稳定器, which work to reduce the size of economic fluctuations. Since they operate automatically, they are termed non-discretionary policy非自行决定政策. While, Fiscal & monetary policies that attempt to reduce the short-run fluctuations of the business cycle, are called stabilization policies 稳定政策, because they try to ‘stabilize’ the economy, or eliminate short-run instabilities caused by increases & decreases of aggregate demand. Therefore, if stabilization policies worked as intended, the business cycle would be flattened out平缓, and the economy’s actual output would be very close to its potential output.
Conclusion on Fiscal policy
Monetary policy
The central bank
It is a financial institution given privileged control over the production and distribution of money and credit for a nation or a group of nations.
Reduce interest rales
GDP and employment to grow
Central bank institution which conducts a nation's monetary policy and regalates its banking system.
The role of central banks
Banker to the government
Holds the government's cash
Receives payments for the government
Makes payments for the government
Manages the government's borrowing
Bank of commercial bank
Holds deposits
Makes loans
Regulator of commercial banks: The central bank regulates and supervises commercial banks, making sure they operate with appropriate levels of cash and according to rules that ensure the safety of the financial system.
Determination of the rate of interest
Monetary policy impacts “indirectly on aggregate demand” through the rate of interest.
the level of risk 风险水平: the greater the risk, the higher the interest rate; The length of the period of time: the longer the time period, the higher the interest rate; the size of the loan: the larger the loan, the lower the interest rate.
Expansionary (easy) monetary policy
When the economy is experiencing a recessionary gap due to insufficient aggregate demand. The action that central bank intends to take is to increase the amount of money supply, causing a rightward shift in the supply of money curve from Sm1 to Sm2. With the demand for money constant, the interest rate falls from i1 to i2.
The drop in the rate of interest means a lower cost of borrowing. Therefore, consumers and firms are likely to borrow more & spend more, so that consumption spending (C) and investment spending (I) increase. The effect is to increase aggregate demand and cause a rightward shift of the AD curve. PAY ATTENTION: The effects of the AD increase are different depending on the shape of the AS curves. (New classical model & Keynesian model)
An increase in the money supply by the central bank is referred to as an “easy monetary policy”. It is also an expansionary monetary policy, since the objective is to expand aggregate demand and the level of economic activity.
Conclusion
Monetary policy is carried out by the central bank, which aims at changing interest rates to influence the I & C components of aggregate demand.
In a recessionary gap, the central bank may pursue an expansionary (easy monetary) policy through lower interest rates to encourage I & C spending, the objective being to shift the AD curve to the right leading to equilibrium at the full employment level of real GDP (potential GDP).
In an inflationary gap, the central bank can pursue a contractionary (tight monetary) policy through higher interest rates aimed at discouraging I and C spending, causing the AD curve to shift to the left leading to equilibrium at the full employment level of real GDP (potential GDP).
Contractionary monetary policy
When the economy is experiencing a Inflationary gap caused by excess AD. The action that central bank intends to take is to reduce the amount of money supply, causing a leftward shift in the supply of money curve from Sm1 to Sm3. With the demand for money constant, the interest rate rises from i1 to i3.
The increase in the rate of interest means a higher cost of borrowing. Therefore, consumers and firms are likely to borrow less & spend less, so that consumption spending (C) and investment spending (I) decrease. The effect is to decrease aggregate demand and cause a leftward shift of the AD curve. PAY ATTENTION: The effects of the AD decrease are different depending on the shape of the AS curves. (New classical model & Keynesian model)
A decrease in the money supply by the central bank is referred to as a “tight monetary policy”. It is also a contractionary monetary policy, as the objective is to contract aggregate demand and therefore the economy.
Changes in Interest rates and AD
Point of changing the money supply so as to change interest rates is ultimately to influence AD. Changes in interest rates affect two of the four components of aggregate demand: C & I.
Since some consumer spending is paid for out of borrowing 通过借钱来消费, a change in interest rates is intended to affect the amount of consumer spending (C). Similarly, changes in interest rates affect the amount of borrowing by businesses to finance their investment expenditures (I).
Conclusion: An increase in interest rates is intended to lower consumer & business borrowing and hence spending (lower C and I), and therefore shift AD to the left. A decrease in interest rates is intended to increase consumer & business borrowing and hence spending (higher C and I), and therefore shift AD to the right.
Diagram illustration of the money market and the rate of interest
The rate of interest can be thought of as the ‘price’ of money services. The demand for money, Dm, shows the relationship between the rate of interest & the quantity of money demanded, and has the familiar downward-sloping shape of a demand curve.
As the rate of interest falls, the quantity of money demanded by the public (consumers, firms, the government) increases.
Suppose initially the money supply is at Sm1; with demand for money Dm, the equilibrium rate of interest is i1. If the central bank increases the money supply, Sm1 shifts to the right (Sm2), and the equilibrium rate of interest falls to i2. If the central bank decreases the money supply, Sm1 shifts to the left (Sm3), and the equilibrium rate of interest rises to i3.
How the effect of the multiplier changes depending on the price level
The full effect of the multiplier can be achieved only when the price level is constant.
Spending Multiplier
Spending Multiplier= 1/(1-MPC) Or Spending Multiplier= 1/MPS
The ratio of the total change in real GDP caused by a change in spending
MPC & MPS (AP level)
Disposable income = Gross Income (毛收入-扣除税收前的收入/税前收入) – Taxes = Consumption + Savings Marginal propensity to consume/MPC: the percentage of the next dollar of disposable income earned that is spent. Marginal propensity to save: the percentage of the next dollar of disposable income earned that is saved. MPC + MPS = 1/100%
Conclusion on MPC
The larger the MPC, the smaller the value of the denominator of the first fraction, and so the greater is the multiplier. Therefore, the greater the proportion of income spent on consumption, the greater the multiplier. In other word, the smaller the leakages from the Saving, Taxes or the volume of imports, the greater the multiplier.
MPS, MPT & MPM
Corresponding to the marginal propensity to consume (MPC) is the marginal propensity to save边际储蓄倾向 (MPS, or fraction of additional income saved), the marginal propensity to tax边际税收倾向 (MPT, or fraction of additional income taxed), and the marginal propensity to import边际进口倾向 (MPM, or fraction of additional income spent on imported G&S). “MPC + MPS + MPT + MPM = 1/100%.”
Marginal propensity to consume/MPC
It defined as the fraction of additional income that households spend on consumption of domestically produced G&Ss.
if the MPC is ¾（75%) , this means that given an increase in national income of $10 million, 3/4 of this, or $7.5 million is consumption expenditure,
How to calculate the value of the multiplier
To calculate the value of the multiplier, we must look at consumer spending more carefully.
Assume at the very beginning, Income owners receive income;
Then, they might save part of their income;
They pay taxes to the government;
And they buy imported G&S;
At the end, the remaining part of income is spent on “Domestic G&Ss’”.
Which is considered as consumption expenditure.
Therefore, we introduce a new concept to help us to calculate the value of the M.
“Marginal propensity to consume/MPC边际消费倾向”
拿来消费的金额占收入的多少比例
Government borrowing involves an increase in the demand for money, and leads to an increase in the rate of interest
Crowding out effect
Tax multiplier
Tax multiplier=MPC/1-MPC
the ratio of the total change in real GDP caused by a change in taxes
Multiplier
Called induced spending
Marginal propensity to consume,defined as the fraction of additional income that households spend on consumption of domestically produced goods and services.
MPC=change in spending/change in disposable income
Multiplier=1/1-MPC
MPC+MPS+MPT+MPM=1
Multiplier=1/MPS+MPT+MPM
Personal income
Saving
imported goods
Tax
Domestic goods and services(consumption expenditures)
Keynesian multiplier
It defined as the change in real GDP divided by the inital change in expenditure
Multiplier=change in real GDP/initial change in expenditure
multiplier >1 greater than the initial change in expenditure
Multiplier effect:The process by which an increase in autonomous expenditure leads to a larger increase in real GDP
Complete crowding out
The situation in which expansionary fiscal policy, such as an increase in government spending, does not lead to a rise in output because there is an exactly offsetting movement in private spending.
Partical crowding out
EFP Government spending increase Tax decrease
CFP Government spending decrease Tax increase
Evaluating fiscal policy
Strength
Pulling an economy out of a deep recession
Dealing with rapid and escalating inflation
Ability to target sectors of the economy
Direct impact of government spending on aggregate
Ability to affect potential output
Weaknesses
Problems of time lag
Some months may pass in the case of each of these, and by the time the policy action has taken effect the problem may have become less or more severe, so that the policy action is no longer the most appropriate one.
Fiscal policy is “subject to a number of delays in timing” called time lags.
Political constraints
Spending for social services (merit goods such as health care and education) and public goods is undertaken for its own sake and cannot easily be cut if a contractionary policy is required.
In a recession,tax cuts may not be very effective in increasing aggregate demand
Tax cuts are less effective in a recession than increases in government spending because part of the increase in after-tax income is saved. If the proportion of income saved rises due to pessimism about the future, the impacts of tax cuts on aggregate demand are even weaker. Increases in government spending are more powerful because they work in their entirety to increase aggregate demand.
Inability to deal with supply-side causes of instability
Inflation requires a contractionary policy, while the recession requires an expansionary policy.
Inability to "fine tune" the economy
Whereas fiscal policy can lead the economy in a general direction of larger or smaller aggregate demand, it cannot ‘fine tune’ the economy; it cannot be used to reach a precise target with respect to the level of output, employment and price level.
Crowding cut
It will impact
Business activities and investments
Labor Markets
Consumers
The Keynesian model with the ratchet effect
We know that a feature of the Keynesian model is that the price level can easily increase with strong aggregate demand, but does “not easily fall” even as aggregate demand decreases.
We know that a feature of the Keynesian model is that the price level can easily increase with strong aggregate demand, but does “not easily fall” even as aggregate demand decreases.