Chapter 12 Basics of Dynamic Model 友学经济学院
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Topics to be Discussed o Basic principles of building macroeconomic model o Micro basis of macroeconomics g Choices of households ☆ Choices of firms o Introduction to labor market 友学经济学院
Topics to be Discussed Basic principles of building macroeconomic model Micro basis of macroeconomics ❖Choices of households ❖Choices of firms Introduction to labor market
12. 1 Basic Principles of Building Macroeconomic mode o Static economics Static analysis: exogenous variables+parameters==>endogenous variables o Comparative static economics o Comparative static analysis: exogenous variables==>endogenous variables o Dynamic economics s Dynamic analysis: endogenous variables 友学经济学院
12.1 Basic Principles of Building Macroeconomic Model Static economics ❖ Static analysis: exogenous variables+parameters==>endogenous variables Comparative static economics ❖ Comparative static analysis：exogenous variables==>endogenous variables Dynamic economics ❖ Dynamic analysis: endogenous variables
12. 1 Basic Principles of Building Macroeconomic model o Dynamic model in microeconomics .Consider variables time sequence and the time and process needed for variables adjustment &Cobweb theory D Qr=a-p Q3=-y+ 友学经济学院
Dynamic model in microeconomics ❖Consider variables’ time sequence and the time and process needed for variables adjustment ❖Cobweb theory 12.1 Basic Principles of Building Macroeconomic Model t D Qt = a − p = − + t−1 S Qt p D t S Qt = Q
12.1 Basic Principles of Building Macroeconomic model o Dynamic model in macroeconomics .Income-expenditure model C+I c=a+by yt-byt1=1+ 友学经济学院
Dynamic model in macroeconomics ❖Income-expenditure model 12.1 Basic Principles of Building Macroeconomic Model yt=ct+It ct=a+byt-1 yt -byt-1 =It+a