人民大学：《宏观经济学》（英文版） Lecture 3 Intermediate Macroeconomics

Intermediate Macroeconomics Lecture 3

Intermediate Macroeconomics Lecture 3

Topics Finish the assignment from last class Clarification for 4 questions from last class Demand for goods and services equilibrium and the interest rate

Topics  Finish the assignment from last class  Clarification for 4 questions from last class  Demand for goods and services  Equilibrium and the interest rate

Assignment Cobb-Douglas production function Y=F(K, L=AK L 1. What is mPl? 2. What is the relationship between labor income and total income

Assignment  Cobb-Douglas production function 1. What is MPL? 2. What is the relationship between labor income and total income? 1 Y F K L AK L ( , )  − = =

Assignment Y=F(K, L)=AKL-a M、AYY A(1-aKl △LOL What is the shape for MPl? OMPL a41(1-a)(-)kLa1

Assignment What is the shape for MPL? 1 Y F K L AK L ( , )  − = = (1 ) Y Y MPL A K L L L      − = = = −   1 (1 )( ) MPL A K L L      − − = − − 

Assignment Labor income share Labor income:MPL×L A(1-a)kLa×L MPL×DA(1-a)kL×L Y Akail-a

Assignment  Labor income share Labor income: MPL L  A K L L (1 )    − = − 1 (1 ) 1 MPL L A K L L Y AK L       − −  −  = = −

Inventories * In 2002, firm A produced 1000 pc 800 sold at $1000 each 200 become nventories 1) What happened to gdP in 2002? 2) If the 200 inventories were sold at $1500 each in 2003, What happened to gdp in 2003?

Inventories  In 2002, firm A produced 1000 pc. 800 sold at $1000 each, 200 become inventories. 1) What happened to GDP in 2002? 2) If the 200 inventories were sold at $1500 each in 2003, what happened to GDP in 2003?

CPIvS GDP deflator CPI may overstate inflation (sorry! not always B) When it really overstates inflation comparing to the GDP deflator, we should look for reasons from where it differs from the gdp deflator, right?

CPI v.s.GDP deflator  CPI may overstate inflation (sorry! not always ) When it really overstates inflation, comparing to the GDP deflator, we should look for reasons from where it differs from the GDP deflator, right?

CPIvS GDP deflator CPI v.s. GDP Deflator(China) CPI V.S. GDP deflator(U.S) 3.50E+00 3.00E+00 3.00E+00 2.50E+00 2.50E+00 2.00E+00 2.00E+00 1.50E+00 1.50E+00 1.00E+00 1.00E+00 5.00E-01 5.00E-01 0.00E00114 0.00E+00 =N的-N00 D一 C OSOA 50 00 CPI CPI GDP deflator ear gdP deflator

CPI v.s.GDP deflator CPI v.s. GDP Deflator (China) 0.00E+00 5.00E-01 1.00E+00 1.50E+00 2.00E+00 2.50E+00 3.00E+00 3.50E+00 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Year CPI GDP deflator CPI v.s. GDP deflator (U.S.) 0.00E+00 5.00E-01 1.00E+00 1.50E+00 2.00E+00 2.50E+00 3.00E+00 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 YEAR % CPI GDP deflator

CPvS GDP deflator Inflation CPI-CP/ or GD,-G. G Do Inflation (China) Inflation(U. S) 30 1.60E+01 25 12E 的9士 1.00E+01 15 人i988 8.00E+00 10 6.00E+00 4.00E+00 0 2.00E+00 0.00E+00 consumer prices consumer prices gdP deflator gdP deflato

CPI v.s.GDP deflator  Inflation or 1 0 0 CPI CPI CPI − 1 0 0 . . . G D G D G D − Inflation (China) 1988 1994 - 5 0 5 1 0 1 5 2 0 2 5 3 0 1978 1981 1984 1987 1990 1993 1996 1999 year % consumer prices GDP deflator Inflation (U.S.) 0.00E+00 2.00E+00 4.00E+00 6.00E+00 8.00E+00 1.00E+01 1.20E+01 1.40E+01 1.60E+01 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 year % consumer prices GDP deflator

CPIvS GDP deflator 3 differences between Cpi gdP deflator Therefore, it might be 1. Basket has more expensive goods 2. Goods included in the basket have higher weights than in the real world (due to technological improvement) 3. Imports have sky rocketing price ☆☆ Statistics bureaus change basket( types of goods and their weights) now and then

CPI v.s.GDP deflator  3 differences between CPI & GDP deflator Therefore, it might be 1. Basket has more expensive goods 2. Goods included in the basket have higher weights than in the real world (due to technological improvement) 3. Imports have sky rocketing price ☆ ☆ Statistics bureaus change basket (types of goods and their weights) now and then