清华大学经济学原理(钱颖一)Chapter_26

Saving,Investment,andtheFinancialSystem2SavingandInvestment‹GDPSavingandInvestmentareimportantdeterminantsoflong-rungrowthinGDPandlivingstandards.‹Macroeconomistsneedtounderstandwhatdeterminessavingandinvestment,especiallyhowfinancialmarketsworkandhowvariouseventsandpoliciesaffectthem.3Saving‹GDPRecallthatGDPisbothtotalincomeinaneconomyandtotalexpenditureontheeconomy’soutputofgoodsandservices:Y=C+I+G+NX‹Y‹——4Saving——Assumeaclosedeconomy–onethatdoesnotengageininternationaltrade:Y=C+I+G5Saving‹CGNow,subtractCandGfrombothsidesoftheequation:Y–C–G=I‹STheleftsideoftheequationisthetotalincomeintheeconomyafterpayingforconsumptionandgovernmentpurchasesandiscallednationalsaving,orjustsaving(S).S≡Y–C–G6Saving‹Nationalsaving,orsaving,isequalto:S≡Y–C–GS≡(Y–T–C)+(T–G)‹G=T=0S≡Y-C7PrivateSaving‹Privatesavingistheamountofincomethathouseholdshaveleftafterpayingtheirtaxesandpayingfortheirconsumption.Privatesaving≡(Y–T–C)8PublicSaving‹Publicsavingistheamountoftaxrevenuethatthegovernmenthasleftafterpayingforitsspending.Publicsaving≡(T–G)9PublicSaving‹TGIfTG,thegovernmentrunsabudgetsurplusbecauseitreceivesmoremoneythanitspends.‹T-GThesurplusofT-Grepresentspublicsaving.‹GTIfGT,thegovernmentrunsabudgetdeficitbecauseitspendsmoremoneythanitreceivesintaxrevenue.10SavingandInvestment‹SY-C-GSubstitutingSforY-C-G,theequationcanbewrittenas:S=I‹Fortheeconomyasawhole,savingmustbeequaltoinvestment.11SavingandInvestment‹Whatmechanismliebehindthisequality?‹Whatcoordinatessaversandinvestors?‹Answer:Thefinancialsystem.12TheMarketforLoanableFunds‹Financialmarketscoordinatetheeconomy’ssavingandinvestmentinthemarketforloanablefunds.‹Assumingthattheeconomyhasasinglefinancialmarket,wefocusonexplaininghowfinancialmarketscoordinatetheeconomy’ssavingandinvestmentasawhole.13TheMarketforLoanableFundsLoanablefundsreferstoallincomethatpeoplehavechosentosaveandlendout,ratherthanusefortheirownconsumption.14‹SThesupplyofloanablefundscomesfrompeoplewhohaveextraincometheywanttosaveandlendout.‹Y‹Y-C-TTr‹T-GGTSupplyofLoanableFunds:Saving15‹Theinterestrateisthepriceoftheloan.‹Itrepresentstheamountthatborrowerspayforloansandtheamountthatlendersreceiveontheirsaving.‹Theinterestrateinthemarketforloanablefundsistherealinterestrate.SupplyofLoanableFunds:Saving16SupplyofLoanableFunds:Saving‹Becauseahighinterestratemakessavingmoreattractive,thequantityofloanablefundssuppliedrisesastheinterestraterises.‹Thesupplycurveforloanablefundsslopesupward.17DemandforLoanableFunds:Investment‹IThedemandforloanablefundscomesfromhouseholdsandfirmsthatwishtoborrowtomakeinvestments.‹(r)18DemandforLoanableFunds:Investment‹Becauseahighinterestratemakesborrowingmoreexpensive,thequantityofloanablefundsdemandedfallsastheinterestraterises.‹Thedemandcurveforloanablefundsslopesdownward.19SupplyandDemandforLoanableFunds‹Financialmarketsworkmuchlikeothermarketsintheeconomy.‹Theequilibriumofthesupplyanddemandforloanablefundsdeterminestherealinterestrate.20LoanableFunds(inbillionsofdollars)0InterestRateDemandSupply5%$1,200MarketforLoanableFunds...21GovernmentPoliciesThatAffectSavingandInvestment‹Taxesandsaving‹Taxesandinvestment‹Governmentbudgetdeficits22TaxesandSavingTaxesoninterestincomesubstantiallyreducethefuturepayofffromcurrentsavingand,asaresult,reducetheincentivetosave.23TaxesandSaving‹Ataxdecreaseincreasestheincentiveforhouseholdstosaveatanygiveninterestrate.‹Thesupplyofloanablefundscurveshiftstotheright.‹Theequilibriuminterestratedecreases.‹Thequantitydemandedforloanablefundsincreases.S21.Taxincentivesforsavingincreasethesupplyofloanablefunds...AnIncreaseintheSupplyofLoanableFunds...LoanableFunds(inbillionsofdollars)0InterestRate5%Supply,S1$1,200Demand$1,6003....andraisestheequilibriumquantityofloanablefunds.4%2....whichreducestheequilibriuminterestrate...25TaxesandSavingIfachangeintaxlawencouragesgreatersaving,theresultwillbelowerinterestratesandgreaterinvestment.26TaxesandInvestment‹Aninvestmenttaxcreditincreasestheincentivetoborrow.‹Increasesthedemandforloanablefunds.‹Shiftsthedemandcurvetotheright.‹Resultsinahigherinterestrateandagreaterquantitysaved.27TaxesandInvestmentIfachangeintaxlawsencouragesgreaterinvestment,theresultwillbehigherinterestratesandgreatersaving.AnIncreaseintheDemandforLoanableFunds...LoanableFunds(inbillionsofdollars)0InterestRate5%$1,200SupplyDemand,D11.Aninvestmenttaxcreditincreasesthedemandforloanablefunds...D26%2....whichraisestheequilibriuminterestrate...$1,4003....andraisestheequilibriumquantityofloanablefunds.29GovernmentBudgetDeficitsandSurpluses‹Whenthegovernmentspendsmorethanitreceivesintaxrevenues,theshortfalliscalledthebudgetdeficit.‹Theaccumulationofpastbudgetdeficitsiscalledthegovernmentdebt.30GovernmentBudgetDeficitsandSurpluses‹S=(Y–T–C)+(T–G)‹GT‹T-G‹Y-T-C‹31GovernmentBudgetDeficitsandSurpluses‹Governmentborrowingtofinanceitsbudgetdeficitreducesthesupplyofloanablefundsavailabletofinanceinvestmentbyhouseholdsandfirms.‹Thisfallininvestmentisreferredtoascrowdingout.‹Thedeficitborrowingcrowdsoutprivateborrowerswhoaretryingtofinanceinvestments.32Gove