Macro7The IS - LM Model宏观经济学(南开大学,龚刚).ppt

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1、MacroeconomicsLecture7TheIS-LMModelI.IntroductionTheobjectiveintegratethepreviouslydiscussedtwomodels:themodelsforproductmarket,andthemodelformoneymarketanddiscusshowoutputandinterestratearedetermined.I.IntroductionWhyIS-LMThemodelpresentedinthislectureisoften

2、calledtheIS-LMmodelIS:meaningsavingandinvestment,representingtheequilibriuminproductmarket.LM:meaningliquidityandmoney,representingtheequilibriuminthemoneymarket.II.InvestmentDeterminationWhyNeedInvestment?InLecture5,wehaveassumedthatinvestmentisautonomousandi

3、ssimplygiven.Foracompletemodelofoutputdetermination,weneedtodiscusshowinvestmentisdetermined.Itisalsoinvestmentthatconnectsthemodelofproductandthemodelofmoneymarket.II.InvestmentDeterminationTheinvestmentdeterminationThisisoneofthemostcomplicatedissueinmacroec

4、onomics.Empirically,theinvestmentfunctionisthemostdifficultonetobeestimated.II.InvestmentDeterminationTheinvestmentdetermination(continued)Youcanlistasmanyaspossiblefactorsthatcouldaffectinvestment:TechnicalprogressExpectedmarketconditioninthefutureFinancialre

5、sourceGovernmentpolicyInvestmentenvironmentII.InvestmentDeterminationInvestmentandinterestrateThereisnodoubtthatinvestmentshoulddependoninterestrate.Ifinterestrateincrease,investmentshoulddecrease.Thiscanbeconsideredfromthefollowingfigureregardingtherateofretu

6、rnsonthevariousinvestmentprojectsII.InvestmentDeterminationInvestmentandinterestrate(continued)II.InvestmentDeterminationInvestmentfunctionI=f(i,…)where.Seethefigureinthenextpage.II.InvestmentDeterminationInvestmentfunction(continued)II.InvestmentDetermination

7、RemarksontheinterestrateItisbettertounderstandtheinterestrateintheinvestmentfunctionheretobetheloaninterestrate.Thisisdifferentfromtheinterestrateasdiscussedinthelastlecture,thebondinterestrate.II.InvestmentDeterminationRemarksontheinterestrate(continued)There

8、canbemanyinterestratesintherealworldBondinterestrateLoaninterestrate(primerate)DiscountfactorFederalfundrateII.InvestmentDeterminationRemarksontheinterestrate(continued)Basicassump