Stephanie Chapman Mir Inaamullah

lizardgossypibomaΔιαχείριση

28 Οκτ 2013 (πριν από 3 χρόνια και 9 μήνες)

54 εμφανίσεις

Annick

Ashley

Stephanie Chapman

Mir Inaamullah


Measures how much the growth of the market
economy alters the amount of private fixed
investment


(i.e. investment in tangible capital goods or the
replacement of depreciated ones).


Analyzing the Gross Domestic Product, (GDP)


As it increases businesses will, in theory, see rising
profits, higher sales and more cash flow.


Business will then have more confidence in their
ability to boost profit; thus they will more likely
expend more money on private fixed investment.



Used more generally to measure how an
exogenous variable affects an endogenous
one.


Involves how one’s spending essentially
becomes another’s income.


Ultimately, there is a much greater impact on
the equilibrium of national income.


The vertical arrows represent
a constant rise in demand


Horizontal arrows represent
the resulting shift in supply
from the two equilibrium
points. Small change in the
former creates a much
greater difference in the
latter.


Once aggregate demand
rises


expected sales and
output increase


higher
employment rates and
income


more
consumption


raising
aggregate demand yet again.


Company invested 200 million dollars into a new
manufacturing plant.



Expenditures.


The businesses supplying capital goods have new income



Then they, in theory, will spend around 3/5 of their new
profits



Other businesses will gain $120 million collectively.


Thus, the total economy has gained $(200 + (3/5) * 200))
million


The producers who gained the $120 million will likewise
use 3/5 of their profits


We now have a total amount of $(200 + ((3/5) * 200) +
((3/5) + 120)) of new income in the economy.


The cycle will continue but note that the rise in spending
decreases by a fraction each step of the way.



Investment into savings accounts can increase monetary
circulation.


Federal Reserve sets the reserve requirement to 20%


A bank can loan up to $80 of a 100
-
dollar customer deposit.


The $80 will be, then, deposited into another bank that can
then loan out another $64


It only truly affects circulation when money is deposited
domestically, but it essentially gives the Fed great power to
affect money supply.


If the Fed notes a recession in the economy and raises the
reserve requirement to somewhere around 40%, much less
money would be circulating in this same multiplier effect.



set up the model


estimate parameter values


v = capital stock ratio


s = savings rate


obtain final equation




s = 0.08

s = 0.10

s = 0.30


origin goes from unstable to stable


must be a bifurcation!


super
-
critical
Hopf



check data over
last 16 quarters


correlates with
big drop


explanation:
exogenous
shock to the
economy


RECESSION


Model A



Model B


**new parameter k: resistance of the savings rate to change

Conclusions


Multiplier
-
Accelerator model describes
macro
-
economic trends


The two
-
dimensional model results in a Hopf
bifurcation as the savings rate changes


The three
-
dimensional model results in
periodic movement of the savings rate