曼昆第10版课件mankiw10e-lecture-slides-ch15

TheDynamicModelofEconomicFluctuationsMacroeconomicsN.GregoryMankiw©2019WorthPublishers,allrightsreservedINTHISCHAPTER,YOUWILLLEARN:HowtoincorporatedynamicsintotheAD–ASmodelwepreviouslystudiedHowtousethedynamicAD–ASmodeltoillustratelong-runeconomicgrowthHowtousethedynamicAD–ASmodeltotracetheeffectsovertimeofvariousshocksandpolicychangesonoutput,inflation,andotherendogenousvariablesIntroduction,part1Thedynamicmodelofaggregatedemandandaggregatesupplygivesusmoreinsightintohowtheeconomyworksintheshortrun.ItisasimplifiedversionofaDSGEmodel,

usedincutting-edgemacroeconomicresearch.DSGE=dynamic,stochastic,generalequilibriumIntroduction,part2Thedynamicmodelofaggregatedemandandaggregatesupplyisbuiltfromfamiliarconcepts,suchas:theIScurve,whichnegativelyrelatestherealinterestrateanddemandforgoodsandservicesthePhillipscurve,whichrelatesinflationtothegapbetweenoutputanditsnaturallevel,expectedinflation,andsupplyshocksadaptiveexpectations,asimplemodelofinflationexpectationsHowthedynamicAD-ASmodelisdifferentfromthestandardmodelInsteadoffixingthemoneysupply,thecentralbankfollowsamonetarypolicyrulethatadjustsinterestrateswhenoutputorinflationchange.TheverticalaxisoftheDAD–DASdiagrammeasurestheinflationrate,notthepricelevel.Subsequenttimeperiodsarelinkedtogether:

Changesininflationinoneperiodalterexpectationsoffutureinflation,whichchangesaggregatesupplyinfutureperiods,whichfurtheraltersinflationandinflationexpectations.KeepingtrackoftimeThesubscripttdenotestimeperiod;examples:Yt

=realGDPinperiodtYt-1=realGDPinperiodt–1Yt+1=realGDPinperiodt+1Wecanthinkoftimeperiodsasyears;forexample,ift=2010,thenYt

=Y2010

=realGDPin2010Yt-1=Y2009

=realGDPin2009Yt+1=Y2011

=realGDPin2011Themodel’selementsThemodelhasfiveequationsandfiveendogenousvariables:

output,inflation,therealinterestrate,

thenominalinterestrate,andexpectedinflation.Theequationsmayusedifferentnotation,

buttheyareconceptuallysimilartothings

you’vealreadylearned.Thefirstequationisforoutput...Output:Thedemandforgoodsandservices,part1Negativerelationshipbetweenoutputandinterestrate,sameintuitionaswiththeIScurve.Output:Thedemandforgoodsandservices,part2Negativerelationshipbetweenoutputandinterestrate,sameintuitionaswiththeIScurve.Therealinterestrate:TheFisherequationInflation:ThePhillipscurveExpectedinflation:AdaptiveexpectationsForsimplicity,weassumethatpeopleexpectpricestocontinuerisingatthecurrentinflationrate.Thenominalinterestrate:Themonetary-policyrule,part1Thenominalinterestrate:Themonetary-policyrule,part2CASESTUDY:TheTaylorrule,part1EconomistJohnTaylorproposedamonetarypolicyruleverysimilartoours:iff=π+2+0.5(π–2)–0.5(GDPgap)whereiff=nominalfederalfundsratetargetGDPgap=100×=percentagebywhichrealGDPisbelowitsnaturalrateTheTaylorrulematchesFedpolicyfairlywell....CASESTUDY:TheTaylorrule,part2Themodel’svariablesandparameters,part1Endogenousvariable:Themodel’svariablesandparameters,part2Exogenousvariables:Predeterminedvariable:Themodel’svariablesandparameters,part3Parameters:Themodel’slong-runequilibrium,part1Long-runequilibriumisthenormalstatearoundwhichtheeconomyfluctuates.Twoconditionsrequiredforlong-runequilibrium:Therearenoshocks:Inflationisconstant:Themodel’slong-runequilibrium,part2Pluggingtheprecedingconditionsintothemodel’sfiveequationsandusingalgebrayieldstheselong-runvalues:ThedynamicaggregatesupplyTheDAScurveshowsarelationshipbetweenoutputandinflationthatcomesfromthePhillipscurveandadaptiveexpectations:ThedynamicaggregatesupplycurveDASslopesupward:highlevelsofoutputareassociatedwithhighinflation.DASshiftsinresponsetochangesinthenaturallevelofoutput,previousinflation,

andsupplyshocks.Thedynamicaggregatedemandcurve,part1ToderivetheDADcurve,wewillcombinefourequationsandtheneliminatealltheendogenousvariablesotherthanoutputandinflation.Startwiththedemandforgoodsandservices:Thedynamicaggregatedemandcurve,part2Thedynamicaggregatedemandcurve,part3resultfrompreviousslidecombineliketerms,solveforYThedynamicaggregatedemandcurve,part4Theshort-runequilibriumIneachperiod,theintersectionofDADandDASdeterminestheshort-runequilibriumvaluesofinflationandoutput.IntheequilibriumshownhereatA,outputisbelowitsnaturallevel.Long-rungrowthPeriodt:initialequilibriumatAPeriodt+1:Long-rungrowthincreasesthenaturalrateofoutput.DASshiftsbecauseeconomycanproducemoregoodsandservices.DADshiftsbecausehigherincomeraisesdemandforgoodsandservices.NewequilibriumatB;incomegrowsbutinflationremainsstable.AshocktoaggregatesupplyThisprocesscontinuesuntiloutputreturnstoitsnaturalrate.Long-runequilibriumatA.Parametervaluesforsimulations,part1Centralbank’sinflationtargetis2percent.A1-percentage-pointincreaseintherealinterestratereducesoutputdemandby1percentofitsnaturallevel.Thenaturalrateofinterestis2percent.Whenoutputis1%aboveitsnaturallevel,inflationrisesby0.25percentagepoint.ThesevaluesarefromtheTaylorrule,whichapproximatestheactualbehavioroftheFederalReserve.Parametervaluesforsimulations,part2Thefollowinggraphsarecalledimpulseresponsefunctions.Theyshowtheresponseoftheendogenousvariablestotheimpulse(theshock).Thedynamicresponsetoasupplyshock,part1Aone-periodsupplyshockaffectsoutputformanyperiods.Thedynamicresponsetoasupplyshock,part2Becauseinflationexpectationsadjustslowly,actualinflationremainshighformanyperiods.Thedynamicresponsetoasupplyshock,part3Therealinterestratetakesmanyperiodstoreturntoitsnaturalrate.Thedynamicresponsetoasupplyshock,part4Thebehaviorofthenominalinterest

ratedependsonthatoftheinflationandrealinterestrates.Ashocktoaggregatedemand,part3Ashocktoaggregatedemand,part2(1of2)Periodt–1:

initialequilibriumatAPeriodt:Positivedemandshock(ε>0)(lastsfiveperiods)shiftsDADtotheright;outputandinflationrise.Periodt+1:Higherinflationintraisedinflationexpectations

fort+1,shiftingDASup.Inflationrisesmore,outputfalls.Ashocktoaggregatedemand,part2(2of2)Periodst+2tot+4:Higherinflationinpreviousperiodraisesinflationexpectations,shiftsDASup.Inflationrises,outputfalls.Periodt+5:DASishigherduetohigherinflationinprecedingperiod,butdemandshockendsandDADreturnstoitsinitialposition.EquilibriumatG.Periodst+6andhigher:

DAS

graduallyshiftsdownasinflationandinflationexpectationsfall,economygraduallyrecoversuntilreachinglong-runequilibriumatA.Thedynamicresponsetoademandshock,part1Thedemandshockraisesoutputforfiveperiods.Whentheshockends,outputfallsbelowitsnaturallevelandrecoversgradually.Thedynamicresponsetoademandshock,part2Thedemandshockcausesinflationtorise.Whentheshockends,inflationgraduallyfallstowarditsinitiallevel.Thedynamicresponsetoademandshock,part3Thedemandshockraisestherealinterestrate.Aftertheshockends,therealinterestratefallsandapproachesitsinitiallevel.Thedynamicresponsetoademandshock,part4Thebehaviorofthenominalinterestratedependsonthatoftheinflationandrealinterestrates.AshiftinmonetarypolicyThedynamicresponsetoareductionin

targetinflation,part1Reducingthetargetinflationratecausesoutputtofallbelowitsnaturallevelforawhile.Outputrecoversgradually.Thedynamicresponsetoareductionin

targetinflation,part2Becauseexpectationsadjustslowly,

ittakesmanyperiodsforinflationtoreachthenewtarget.Thedynamicresponsetoareductionin

targetinflation,part3Toreduceinflation,thecentralbankraisestherealinterestratetoreduceaggregatedemand.Therealinterestrategraduallyreturnstoitsnaturalrate.Thedynamicresponsetoareductionintargetinflation,part4Theinitialincreaseintherealinterestrateraisesthenominalinterestrate.Astheinflationandrealinterestratesfall,thenominalratefalls.APPLICATION:Outputvariabilityversusinflationvariability,part1Asupplyshockreducesoutput(bad)andraisesinflation(alsobad).Thecentralbankfacesatradeoffbetweenthese“bads”:itcanreducetheeffectonoutputbutonlybytoleratinganincreaseintheeffectoninflation.APPLICATION:Outputvariabilityversusinflationvariability,part2CASE1:θπislarge,θYissmallAPPLICATION:Outputvariabilityversusinflationvariability,part3CASE2:θπissmall,θYislargeAPPLICATION:TheTaylorprinciple,part1TheTaylorprinciple

(namedafterJohnTaylor):

thepropositionthatacentralbankshouldrespondtoanincreaseininflationwithanevengreaterincreaseinthenominalinterestrate(sothattherealinterestraterises)Thatis,thecentralbankshouldsetθπ>0.Otherwise,DADwillslopeupward,theeconomymaybeunstable,andinflationmayspiraloutofcontrol.APPLICATION:TheTaylorprinciple,part2Ifθπ>0:Wheninflationrises,thecentralbankincreasesthenominalinterestrateevenmore,whichincreasestherealinterestrateandreducesthedemandforgoodsandservices.DADhasanegativeslope.APPLICATION:TheTaylorprinciple,part3Ifθπ<0:Wheninflationrises,thecentralbankincreases

thenominalinterestratebyasmalleramount.

Therealinterestratefalls,whichincreasesthedemandforgoodsandservices.DADhasapositiveslope.APPLICATION:TheTaylorprinciple,part4IfDADisupwardslopingandsteeperthanDAS,thentheeconomyisunstable:outputwillnotreturntoitsnaturallevel,andinflationwillspiralupward

(forpositivedemandshocks)ordownward(fornegativeones).Estimatesofθπfrompublishedresearch:θπ

=–0.14from1960to1978,beforePaulVolckerbecameFedchair.Inflationwashighduringthistime,especiallyduringthe1970s.θπ

=0.72duringtheVolckerandGreenspanyears.Inflationwasmuchlowerduri