Lecture 5 Production function

Lecture 5 Production function - "&&/012330 42...

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Unformatted text preview: !"# %&'() *+,, &'-') ./012330/ 42+5/67 .++, 89%9&'-' (2:5;/2 <= >?2 [email protected]@/[email protected]+52 A/0B;:560C 1;C:560C-9-& !"#$%&" ( "#$ %&&'$&%($ )'*+,-(.*/ 0,/-(.*/ Last time ¡ savings identities ( Chapt e r 2 . 3 ) ¡ the current account ( Chapt e r 2 . 3 ) ¡ national wealth ( Chapt e r 2 . 3 ) Today ¡ stocks and flows ¡ the aggregate production function ( Chapt e r 3 . 1 , Exampl e 3 . 1 ) ¡ Reminder: Quiz 1 du e Sunday 9/5, 11:59 pm with 2-hour grace period Next time ¡ labor demand ( Chapt e r 3 . 2 ) ¡ labor supply ( Chapt e r 3 . 3 ) 1(*-23 %/+ 04*53 definitions ¡ s to c k variabl e : quantity measured at a point in time ± examples: money stock, capital stock, national wealth, government debt ¡ flow variabl e s : quantity measured over a period of time WKH\ DUH ³UDWHV´¡ WKHLU XQLW LV SHU WLPH SHULRG ± examples: GDP ($/year), C, I, NX, G, government deficit, national saving ¡ some variables are not called either stocks or flows, but they could be measured at a point in time, or over time ± examples: price level, inflation rate, interest rate stocks change through flows 1. one way for the stock of national wealth to change is through the flow of national saving see previous lecture 2. capital stock changes through the flow of net investment 3. the stock of government debt changes through the flow of government deficit & !"# %&'() *+,, &'-') ./012330/ 42+5/67 .++, 89%9&'-' (2:5;/2 <= >?2 [email protected]@/[email protected]+52 A/0B;:560C 1;C:560C &9-& "#$ -%).(%4 %--,6,4%(.*/ $7,%(.*/ notation ± ܭ ௧ : the stock of capital at the b e ginning of period t ± ܫ ௧ : gross investment during period t ± Ɂ : depreciation rate ± ߜܭ ௧ : depreciation during period t WKH ³ODZ RI PRWLRQ´ IRU FDSLWDO % ! "#$%#&'()'*+ +#) '+-#.)/#+) ) ) ) ) 1 ¡ ¡ ¢ 8*9$'/6$/( :,+&$( -*/3('%./( notation ± ܤ ௧ : government bonds at the e nd of period t ± ܩ ௧ : government expenditures during period t ± ܴ ௧ : taxes collected during period t ± ܴܶ ௧ : transfers made during period t ± i : nominal interest rate WKH JRYHUQPHQW¶V EXGJHW FRQVWUDLQW GXULQJ SHULRG t ! ! ! 2! 3 2 3 ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) 4/) ) ) 5 ' 6 78 7 5 5 5 '5 6 78 7 7 78 197 6 197 : ¢ ¢ ¢ ¡ ¡ ¡ ¡ ¢ ¡ ¡ ¢ ¢ ¢ ¢ ¢ ! &;(+4# '+ 4*-#%+/#+) "#<) 4*-#%+/#+) "#='&') 4/) ) ) ) 5 5 : ¢ ¢ ¢ !"# %&'() *+,, &'-') ./012330/ 42+5/67 .++, 89%9&'-' (2:5;/2 <= >?2 [email protected]@/[email protected]+52 A/0B;:560C 1;C:560C &9-& "#$ -%).(%4 %--,6,4%(.*/ $7,%(.*/ notation ± ܭ ௧ : the stock of capital at the b e ginning of period t ± ܫ ௧ : gross investment during period t ± Ɂ : depreciation rate ± ߜܭ ௧ : depreciation during period t WKH ³ODZ RI PRWLRQ´ IRU FDSLWDO % !...
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Lecture 5 Production function - "&&/012330 42...

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