中级宏观经济学第十七章课件

CHAPTER 17Expectations,Output,and PolicyExpectations,Output,and PolicyCHAPTER 17Prepared by:Fernando Quijano and Yvonn QuijanoCopyright 2009 Pearson Education,Inc.Publishing as Prentice Hall Macroeconomics,5/e Olivier Blanchard中级宏观经济学第十七章课件Chapter 17:Expectations,Output,and PolicyCopyright 2009 Pearson Education,Inc.Publishing as Prentice Hall Macroeconomics,5/e Olivier Blanchard17-1 Expectations and Decisions:Taking StockExpectations,Consumption,and Investment DecisionsExpectations affect consumption and investment decisions,both directly and through asset prices.Expectations and Spending:The ChannelsFigure 17-1217-1 Expectations and DecisioChapter 17:Expectations,Output,and PolicyCopyright 2009 Pearson Education,Inc.Publishing as Prentice Hall Macroeconomics,5/e Olivier BlanchardNote from Figure 17-1:An increase in current and expected future after-tax real labor income,or a decrease in current and expected future real interest rates,increases human wealth and leads to an increase in consumption.An increase in current and expected future real dividends,or a decrease in current and expected future real interest rates,increases stock prices which leads to an increase in nonhuman wealth and an increase in consumption.17-1 Expectations and Decisions:Taking StockExpectations,Consumption,and Investment Decisions3Note from Figure 17-1:17-1 EChapter 17:Expectations,Output,and PolicyCopyright 2009 Pearson Education,Inc.Publishing as Prentice Hall Macroeconomics,5/e Olivier BlanchardNote from Figure 17-1:A decrease in current and expected future nominal interest rates leads to an increase in bond prices,which leads to an increase in nonhuman wealth and an increase in consumption.An increase in current and expected future real after-tax profits,or a decrease in current and expected future real interest rates,increases the present value of real after-tax profits,which leads to an increase in investment.17-1 Expectations and Decisions:Taking StockExpectations,Consumption,and Investment Decisions4Note from Figure 17-1:17-1 EChapter 17:Expectations,Output,and PolicyCopyright 2009 Pearson Education,Inc.Publishing as Prentice Hall Macroeconomics,5/e Olivier BlanchardConsumption and investment depend on expectations of the future.To take into account the effect of expectations,we do the following:Earlier,the IS relation was:Define aggregate private spending or simply,private spending,A,as:Rewrite the IS relation as:17-1 Expectations and Decisions:Taking StockExpectations and the IS Relation5Consumption and investment depChapter 17:Expectations,Output,and PolicyCopyright 2009 Pearson Education,Inc.Publishing as Prentice Hall Macroeconomics,5/e Olivier BlanchardGivenandand incorporating the role of expectations,then:*Primes denote future values,and e denotes expected values.The positive and negative signs explain how:17-1 Expectations and Decisions:Taking StockExpectations and the IS Relation6Givenandand incorporating the Chapter 17:Expectations,Output,and PolicyCopyright 2009 Pearson Education,Inc.Publishing as Prentice Hall Macroeconomics,5/e Olivier Blanchard17-1 Expectations and Decisions:Taking StockExpectations and the IS RelationGiven expectations,a decrease in the real interest rate leads to a small increase in output:The IS curve is steeply downward sloping.Increases in government spending or in expected future output shift the IS curve to the right.Increases in taxes,in expected future taxes,or in the expected future real interest rate shift the IS curve to the left.The New IS CurveFigure 17-2717-1 Expectations and DecisioChapter 17:Expectations,Output,and PolicyCopyright 2009 Pearson Education,Inc.Publishing as Prentice Hall Macroeconomics,5/e Olivier BlanchardThe new IS curve is steep,which means that a large decrease in the current interest rate is likely to have only a small effect on equilibrium income,for two reasons:A decrease in the current real interest rate does not have much effect on spending if future expected rates are not likely to be lower as well.The multiplier is likely to be small.If changes in income are not expected to last,they will have a limited effect on consumption and investment.17-1 Expectations and Decisions:Taking StockExpectations and the IS Relation8The new IS curve is steep,whiChapter 17:Expectations,Output,and PolicyCopyright 2009 Pearson Education,Inc.Publishing as Prentice Hall Macroeconomics,5/e Olivier BlanchardChanges in other than Y and r,shift the IS curve:Changes in T(current taxes)or G(current government spending)shift the IS curveChanges in expected future variables also shift the IS curve.17-1 Expectations and Decisions:Taking StockExpectations and the IS Relation9Changes in Chapter 17:Expectations,Output,and PolicyCopyright 2009 Pearson Education,Inc.Publishing as Prentice Hall Macroeconomics,5/e Olivier BlanchardThe LM relation is not modified because the opportunity cost of holding money today depends on the current nominal interest rate,not on the expected nominal interest rate one year from now.The interest rate that enters the LM relation is the current nominal interest rate.17-1 Expectations and Decisions:Taking StockThe LM Relation Revisited10The LM relation is not modifieChapter 17:Expectations,Output,and PolicyCopyright 2009 Pearson Education,Inc.Publishing as Prentice Hall Macroeconomics,5/e Olivier Blanchardthe Mission of the FED “The Congress has entrusted the Federal Reserve with great responsibilities.In every phase of our work and decision making,we consider the well-being of the American people and the prosperity of our nation.”Chair Janet L.Yellen 11the Mission of the FED Chapter 17:Expectations,Output,and PolicyCopyright 2009 Pearson Education,Inc.Publishing as Prentice Hall Macroeconomics,5/e Olivier BlanchardWhen the Fed expanded the money supply,“the”interest rate went down,and spending increased.There are many interest rates,keep these two distinctions in mind:1.The distinction between the nominal interest rate and the real interest rate.2.The distinction between current and expected future interest rates.17-2 Monetary Policy,Expectations,and Output12When the Fed expanded the moneChapter 17:Expectations,Output,and PolicyCopyright 2009 Pearson Education,Inc.Publishing as Prentice Hall Macroeconomics,5/e Olivier BlanchardDecreasing the current nominal interest rate i effects the current and expected future real interest rates depending on two factors:Whether the increase in the money supply leads financial markets to revise their expectations of the future nominal interest rate,ie.Whether the increase in the money supply leads financial markets to revise their expectations of both current and future inflation e and e.17-2 Monetary Policy,Expectations,and OutputFrom the Short Nominal Rate to Current and Expected Real Rates13Decreasing the current nominalChapter 17:Expectations,Output,and PolicyCopyright 2009 Pearson Education,Inc.Publishing as Prentice Hall Macroeconomics,5/e Olivier Blanchard17-2 Monetary Policy,Expectations,and OutputFrom the Short Nominal Rate to Current and Expected Real RatesThe IS curve is steeply downward sloping.Other things equal,a change in the current interest rate has a small effect on output.The LM curve is upward sloping.The equilibrium is at the intersection of the IS and LM curves.The New ISLMFigure 17-31417-2 Monetary Policy,ExpectaChapter 17:Expectations,Output,and PolicyCopyright 2009 Pearson Education,Inc.Publishing as Prentice Hall Macroeconomics,5/e Olivier Blanchard17-2 Monetary Policy,Expectations,and OutputMonetary Policy RevisitedThe effects of monetary policy on output depend very much on whether and how monetary policy affects expectations.The Effects of an Expansionary Monetary PolicyFigure 17-41517-2 Monetary Policy,ExpectaChapter 17:Expectations,Output,and PolicyCopyright 2009 Pearson Education,Inc.Publishing as Prentice Hall Macroeconomics,5/e Olivier BlanchardThe effects of monetary policy depend crucially on its effect on expectations:If a monetary expansion leads financial investors,firms,and consumers to revise their expectations of future interest rates and output,then the effects of the monetary expansion on output may be very large.But if expectations remain unchanged,the effects of the monetary expansion on output will be small.17-2 Monetary Policy,Expectations,and OutputMonetary Policy RevisitedPeople form expectations about the future by assessing the likely course of future expected policy and then working out the implications of future activity.Economists refer to expectations formed in a forward-looking manner as rational expectations16The effects of monetary policyChapter 17:Expectations,Output,and PolicyCopyright 2009 Pearson Education,Inc.Publishing as Prentice Hall Macroeconomics,5/e Olivier BlanchardRational ExpectationsUntil the 1970s,macroeconomists thought of expectations as:Animal spirits-the Keynesian treatment of expectations,which considers them important but unexplained.Backward-looking ruleseither static or adaptive expectations.The assumption of rational expectations is one of the most important developments in macroeconomics in the last 25 years.17Rational ExpectationsUntil theChapter 17:Expectations,Output,and PolicyCopyright 2009 Pearson Education,Inc.Publishing as Prentice Hall Macroeconomics,5/e Olivier BlanchardRecall the conclusions we reached in the core about the effects of a budget deficit reduction:In the long run,a reduction in the budget deficit is likely to be beneficial for the economy.In the medium run,a lower budget deficit implies higher saving and higher investment.In the long run,higher investment translates into higher capital and thus higher output.In the short run,however,a reduction in the budget deficit,unless it is offset by a monetary expansion,leads to lower spending and to a contraction in output.17-3 Deficit Reduction,Expectations,and Output18Recall the conclusions we reacChapter 17:Expectations,Output,and PolicyCopyright 2009 Pearson Education,Inc.Publishing as Prentice Hall Macroeconomics,5/e Olivier BlanchardLets review what we learned about the effects of a deficit reduction in the medium run and the long run:In the medium run,a deficit reduction has no effect on output.It leads,however,to a lower interest rate and to higher investment.In the long run,higher investment leads to a higher capital stock,and to a higher level of output.17-3 Deficit Reduction,Expectations,and OutputThe Role of Expectations about the Future19Lets review what we learned aChapter 17:Expectations,Output,and PolicyCopyright 2009 Pearson Education,Inc.Publishing as Prentice Hall Macroeconomics,5/e Olivier Blanchard17-3 Deficit Reduction,Expectations,and OutputBack to the Current PeriodWhen account is taken of its effect on expectations,the decrease in government spending need not lead to a decrease in output.The Effects of a Deficit Reduction on Current OutputFigure 17-52017-3 Deficit Reduction,ExpecChapter 17:Expectations,Output,and PolicyCopyright 2009 Pearson Education,Inc.Publishing as Prentice Hall Macroeconomics,5/e Olivier BlanchardDeficit reduction may actually increase spending and output,even in the short run,if people take into account the future beneficial effects of deficit reduction.In response to the announcement of deficit reduction,Current spending goes downthe IS curve shifts to the left.Expected future output goes upthe IS curve shifts to the right.And the interest rate goes downthe IS curve shifts to the right.17-3 Deficit Reduction,Expectations,and OutputBack to the Current Period21Deficit reduction may actuallyChapter 17:Expectations,Output,and PolicyCopyright 2009 Pearson Education,Inc.Publishing as Prentice Hall Macroeconomics,5/e Olivier BlanchardSmall cuts in government spending and large expected cuts in the future will cause output to increase more in the current perioda concept known as backloading.Backloading,however,may lead to a problem with the credibility of the deficit reduction programleaving most of the reduction for the future,not the present.The government must play a delicate balancing act:enough cuts in the current period to show a commitment to deficit reduction and enough cuts left to the future to reduce the adverse effects on the economy in the short run.17-3 Deficit Reduction,Expectations,and OutputBack to the Current Period22Small cuts in government spendChapter 17:Expectations,Output,and PolicyCopyright 2009 Pearson Education,Inc.Publishing as Prentice Hall Macroeconomics,5/e Olivier BlanchardCan a Budget Deficit Reduction Lead to an Output Expansion?Ireland in the 1980sTable 1Fiscal and Other Macroeconomic Indicators,Ireland,1981 to 1984 and 1986 to 1989198119821983198419861987198819891 Budget deficit(%of GDP)-13.0-13.4-11.4-9.5-10.7-8.6-4.5-1.82 Output growth rate(%)3.32.3-0.24.4-0.44.75.25.83 Unemployment rate(%)9.511.013.515.017.116.916.315.14 Household saving rate (%of disposable income)17.919.618.118.415.712.911.012.623Can a Budget Deficit ReductionChapter 17:Expectations,Output,and PolicyCopyright 2009 Pearson Education,Inc.Publishing as Prentice Hall Macroeconomics,5/e Olivier BlanchardTo summarize,the change in output as a result of deficit reduction depends on:The credibility of the programThe timing of the programThe composition of the programThe state of government finances in the first place.17-3 Deficit Reduction,Expectations,and OutputBack to the Current Period24To summarize,the change in ouChapter 17:Expectations,Output,and PolicyCopyright 2009 Pearson Education,Inc.Publishing as Prentice Hall Macroeconomics,5/e Olivier BlanchardKey Termsaggregate private spending,or private spendinganimal spiritsadaptive expectationsrational expectationsbackloadingcredibility25Key Termsaggregate private spe