Simplistic macroeconomic issues
?--- Reading notes
Previous study of macroeconomic, feeling very vague, that some, but not a system,
many of the macro on specific issues, understanding Debu through, he could not. This
time, the study prepared by the Ministry of Commerce,
&quot;Macroeconomics&quot;, feeling a great harvest of the previous study
were summarized, but also to grasp the point, the Great Books relaxed than before.
General point: the macroeconomic to simplify.
Grasp the macro economy, we must first grasp its structure, key concepts and
principles, analysis and so on.
First, macroeconomic performance, objectives, research and analysis
1. Run (four sectors: residents, businesses, government, foreign):
(1) the conditions of economic equilibrium: investment + government purchases + net
exports = savings + government revenue (taxes - transfer payments) + imports
(2) the center of the macroeconomic issues: the decision of the national income (the
Keynesian effective demand).
2. Macro (policy) objectives
(1) economic growth.
Economic growth involves four issues: economic growth can be achieved; economic
growth that the smooth, short-term fluctuations do not appear larger; economy can
achieve long-term sustainable growth; economic growth is a valid growth, which can
bring about national welfare and social benefits of synchronous growth.
The economic cycle of four phases: recovery, prosperity, recession, depression.
(2) full employment (community employment)
Okun&#39;s Law: the United States found the famous economist Aseaoken
cycle fluctuations in the rate of economic growth and the empirical relationship
between the unemployment rate, that is when the real GDP growth relative to
potential GDP growth (the United States generally defined as 3 %) decreased by 2%,
the unemployment rate increased by about 1%; when real GDP growth relative to
potential GDP growth increased by 2%, the unemployment rate fell by about 1%, this
rule of thumb in the name of its discoverer, called the Austrian positive law. Potential
GDP Okun first proposed this concept, and it is Zhi maintaining the stability of
relative prices, a State economy produced the greatest value. Potential GDP, also
known as full employment GDP.
(3) price level stability (the general price level)
A country&#39;s price level does not lower the better, not better.
Macroeconomic analysis and the prices to be resolved is: What are the causes of price
changes? What level of price changes, economic performance can bear? Tonghua
inflation and deflation in place to economic and social harm? Government to take
measures to curb inflation and deflation?
(4) balance of payments (external balance)
Target refers to the internal balance of economic growth, full employment and price
stability, external balance refers to balance of payments target.
3. The main task of macroeconomic management in China:
To maintain steady economic growth; promote economic structural optimization;
improve macro-economic benefits; greater emphasis on social equity.
4. Analysis of macro-economic aspects should be noted that 6
(1) to measure: what indicators to use to analyze and evaluate
GDP (gross domestic product, geographic space), GNP (gross national product to
national operator), NDP (net domestic product), NI (national income), PI (personal
income), DPI (disposable personal income).
(2) balance: The total supply and total demand and income decision. From the three
major markets (product market, money market or financial markets, labor market) of
the total supply and total demand, analysis of potential problems of economic
operation to adjust supply and demand, to maintain the macroeconomic balance.
(3) stability: economic fluctuations and economic cycles. Of reason? Why does the
economic cycle? How to avoid big fluctuations in the economy?
(4) Monitoring: inflation and unemployment. Short-term: the government is most
concerned about inflation and unemployment, is the focus of the annual monitoring of
(5) dynamic: economic growth and economic development. From long-term study of
the economic growth momentum and its influencing factors, focusing on sustainable
economic development and the corresponding long-term economic strategy.
(6) Regulation: What measures adopted by the Government (fiscal, monetary,
industrial and other macroeconomic policies), how to select control objectives, how to
employ various means to effectively regulate the economy, how to assess the effects
of policy control.
5. The consensus of macroeconomic school
Macroeconomic School (Keynesian, Neoclassical Synthesis, Monetarist, New
Classical, New Keynesian) to macroeconomic problems, the following consensus: (1)
in the long run, the total output capacity to determine the living level; (2) in the short
run, aggregate demand can affect output; (3) the expected impact of future economic
behavior of the current period; (4) in the long run, the total output will eventually be
restored to its natural level, the output level depends on the natural rate of
unemployment, the level of capital stock and technology.
Second, aggregate demand and aggregate supply
1. Macroeconomics main tasks: inspection that the main macroeconomic indicators,
such as production, prices, employment, interest rates, consumption, investment,
taxation, government consumption, exchange rates, import and export, is determined
by what factor . Basically, the indicator is the total demand and total supply by the
interaction of the decision. Most macro-economic phenomena, can be attributed to
aggregate demand and aggregate supply interaction.
2. Aggregate demand: including consumption, investment, net exports, that is,
&quot;Troika&quot;; multiplier principle.
(1) consumer demand: the marginal propensity to consume different (lower income,
the higher the marginal propensity to consume); consumption structure (the Engel
coefficient: The more family income, consumption expenditure used to buy food the
smaller proportion of the cost).
(2) investment demand: According to material form of investment, including
investment in fixed assets and inventory investment, but often refers to fixed asset
Diminishing marginal returns of capital (when the capital stock reaches a certain level,
additional capital gains will be lower and lower). When adding a unit of capital is
equal to the revenue generated by its investment cost, investment reached the optimal
The main factors affecting investment: Investment is expected to return, the
(3) external demand
Trade impact on a country&#39;s economy, mainly for the optimal allocation of
economic factors, to improve the macro-economic efficiency and improve the positive
impact of the economic structure, is much larger than the direct pull of the GDP.
3. The international demand for leading three modes:
U.S. consumer-led model, the East Asian export-led model, the former Soviet Union
and Russia&#39;s investment-led model.
4. Aggregate demand and aggregate supply analysis, policy implications:
When the economy is the deviation of the time (short-term, when resources are not
fully utilized), the Government&#39;s macroeconomic policy can be used to
actively intervene in the economy running (for example, expansionary fiscal and
monetary policies to expand aggregate demand) to improve the level of employment
and output; when the economy normal operation, the Government should not
intervene in economic operation.
Third, economic growth and economic development
1. Short-term: the general level of economic activity in major decisions by the
aggregate demand; long: factors determining economic growth momentum is required
from the analysis of aggregate supply.
2. The decisive factor of economic growth:
Physical capital (machines, equipment, plant, raw materials, etc.), human capital,
natural resources, science and technology and management techniques, economic
system (New Institutional Economics)
3. Economic growth model:
Harrod - Domar growth model (short-term fluctuations in the economy is not the
same as the actual growth rate desired growth rate; from the long term, the desired
rate of growth is inconsistent with the natural growth rate will lead to economic
fluctuations; to achieve long-term stable economic growth conditions: the actual
growth rate, a desired growth rate, natural growth rate of three are equal).
New Cambridge economic growth model: reveals how changes in income distribution,
savings rates, to achieve steady economic growth.
Solow model (that is, the neoclassical growth model, also known as exogenous
growth theory, the savings rate to improve the steady state capital stock and output
level has a positive impact; technological progress is the key factor of economic
growth; population growth will lead to labor increase and total output increase).
Endogenous growth theory (new growth theory, theory of ideas and policy proposals:
the government could provide subsidies for research and development to achieve the
objective of promoting economic growth; to the Government to reduce tariffs, capital
tax and other policy measures to encourage capital accumulation and international
trade, to promote economic growth; emphasis on human capital, technological
progress and government functions in promoting economic growth, the importance of
improving social welfare).
4. ≠ economic development, economic growth, often for &quot;growth
without development&quot; phenomenon.
Green GDP Index: Measuring the quality and efficiency of economic growth, the total
available green GDP index. China, mainly through the following indicators reflect the
quality of economic growth: unit GDP energy consumption; major pollutant emissions;
total factor productivity; financial income; corporate profit margins; per capita
5 major feature of economic development: per capita GDP growth rate higher;
productivity improved faster; fast changing economic structure; social structure and
change of ideas quickly; and foreign economic ties strengthened.
5. Transformation of economic growth (extensive, intensive)
Fourth, the economic structure (the proportion of economic relations within and
between all the links)
1. Including the industrial structure, regional economic structure, urban and rural
economic structure, ownership structure, product structure, demand structure, the
structure of income distribution, employment structure.
(1) Impact factors: There are three types, the demand side: including income levels,
income structure, personal consumption structure; production areas include:
technology and production factors (natural resources, labor and capital); system: the
country&#39;s economy, including policy and other institutional factors, such as
market sophistication and size of the liquidity factor.
Three division structure: the division of China&#39;s industry standards: the
primary industry, including agriculture (forestry, animal husbandry and fisheries, etc.),
the secondary industry, including industry (in mining, manufacturing, water,
electricity, etc.) and construction, The remaining industry tertiary industry, tertiary
industry can be divided into circulation and service sectors.
Three industries in the position and the proportion of macro-economic structure, with
three indicators: the employment of all industries the proportion of total employment;
the industry added value created by the share of total GDP; the industry accounted for
the total capital amount of capital ratio.
Petty Clark&#39;s Law: the steady decline in employment in primary industry,
secondary and tertiary industries increased employment. Kuznets law: With economic
development, primary industries to achieve the national income, the proportion of
national income in the whole, showed a downward trend, while the second and
tertiary industries, the proportion of the rise.
Industrial structure: Factor intensity of view, can be divided into labor, capital,
technology-intensive. Industrialization stage: heavy industrialization - high degree of
processing - technology intensification (Hoffman&#39;s Law: In the
manufacturing sector, consumer goods industry is declining, increasing the proportion
of capital goods industries)
(3) leading industry led to non-leading industries (direction and intensity)
(4) industrial transfer: the result of economic globalization; directly related to the
advantages of conversion between national economies and the world economic
pattern of the shift. The past 50 years, there have been three large-scale global
3. Regional economic structure
(1) the spatial structure of economic regional development patterns: growth pole
model (reflected in pole position: sector growth center [as an economic space on a
driven industry]; room for growth center [as the accumulation of geographical space
industry town. the impact on the surrounding area: polarization effects, diffusion
effects]; point axis of development.
(2) Regional Economy: regional division; Regional Conflict.
4. Urban and rural economic structure:
(1) meaning: that of capital, land, labor and other production factors in the distribution
patterns between urban and rural areas and proportion.
(2) developing countries, urban-rural dual economic structure.
(3) urban-rural dual economic structure theory: Lewis model; Higgins binary system
of technology; Fei Han - Grannys binary system model; Schultz&#39;s theory of
transformation of traditional agriculture.
5, macroeconomic issues and the macro-control
(A) of the problem: employment (efficiency), price, income distribution, social
1. Unemployment types: cyclical, structural transformation, market barriers, and
2. Price level
(1) China&#39;s Price Index Type: consumer price index, retail price index,
producer price index, capital goods price index.
(2) the type of inflation (based on the price rise: mild, 10%; accelerated, 10% -100%;
malignant: 100%. According to the cause: demand-driven, cost-push, structural,
The relationship between inflation and unemployment - the Phillips Curve:
Unemployment and inflation there is an alternative relationship, that the inflation rate,
unemployment is low; inflation rate is low, unemployment is high. From a side note to
reduce the inflation rate and reduce the unemployment rate between the two
conflicting objectives. Most economists believe: in short, alternating between
inflation and unemployment relationship; in the long term, inflation and
unemployment, there is no alternative relationship (due to the expected inflation rate
consistent with the actual inflation rate, it does not cause inflation employment
3. Income Distribution
Lorenz curve and Gini coefficient. Lorenz curve: a certain level of income that the
number of total population, and their percentage of total income received quantitative
relationship between the (45 degree line of complete equality line). Gini coefficient:
The Lorenz curve and the total (not) equal the folder line area ratio of a value, to
reflect differences in the overall level of income distribution, a measure of inequality
indicators (the greater the greater the difference between income distribution, said: 0.2
below, a high degree of equalization of income distribution; 0.2-0.3, relatively equal;
0.3-0.4, the income gap is reasonable; 0.4 above, the income gap is too large; 0.6 or
above, highly uneven.)
(B) of the macro-control
1. Means: that macroeconomic policies, mainly fiscal, monetary, industrial policy
(1) fiscal policy:
① instruments include: taxes, bonds, government purchases, transfer payments. The
main target of regulation: the total demand.
According to the Financial revenue and expenditure activities of the socio-economic
effects, divided into: expansive, constrictive and neutral fiscal policy.
According to adjust the economic cycle, included: automatic stabilizers and
discretionary fiscal policy.
③ effects: multiplier effect and crowding-out effect.
④ Function Finance and Public Finance
Functional Finance: income and expenditure budget of fiscal policy subject to
macro-control needed to maintain macroeconomic running smoothly.
Public Finance: Government by the collective will of the public to provide the market
mechanism can not effectively provide public goods to meet the needs of the
community of public distribution of economic activity or activities. It is not a
financial transfer payment, nor is it purely national welfare policy, macroeconomic
adjustment to run the government, the market mechanism to make up for deficiencies
in a policy tool, is the government spending (the purchase) of a form.
(2) monetary policy:
① use monetary policy to adjust the overall demand, the same should adhere to the
&quot;counter-cyclical&quot; principle: in the doldrums, the expansion;
prosperity or high inflation, the tightening.
② measure: (from high to low)
M0: cash in circulation. And consumer price changes are closely related.
M1: M0 + demand deposits + units travelers checks, credit card type deposits. For the
narrow money supply, the situation reflects the tightness of enterprise funds.
M2: M1 + time deposits + savings deposits of residents unit. Industry, the broad
money supply, reflecting changes in aggregate demand.
M3: M2 + finance + commercial paper + large bond negotiable certificates of deposit.
L: M3 + other current assets, such as savings bonds and short-term financial bonds
and other valuable.
③ The main tools: open market operations; legal reserve system; discount rate.
④ limitations: one, a liquidity trap: the interest rates already so low, the central bank
to increase money supply through lowering interest rates again, it will not increase
investment and consumption.
Fiscal policy and monetary policy mix: Tinbergen rule: the number of independent
policy goal to achieve, at least by the number of species of the main independent and
effective policy instruments.
(3) Industrial Policy:
① meaning: refers primarily to the government to change the allocation of resources
between industries and enterprises in a variety of industries, business activities and
the policies adopted. It is government intervention in the allocation of economic
resources, reflecting the government&#39;s economic development strategy to
promote the rationalization of industrial structure and Advancement, improve the
international competitiveness of domestic products.
② main elements: industrial policy, industrial organization policy, industrial
technology policy, industrial policy on regional distribution. The focus of industrial
organization policy has two aspects: to support a more competitive enterprises to
enable them to scale as soon as possible; to encourage SMEs and large enterprises
cooperation and speed up development in order to maintain the economic vitality and
to meet employment needs.
③ development factors to be considered: based on national conditions; have fiscal
and monetary policy supporting; follow the general rules of market economy.
2. Reason: inherent cyclical macroeconomic fluctuations; the market mechanism is
difficult to fully play a role.
3. Type: contraction type, expansion type, structure type
4. Features: Volume control and structural control on the other; demand and supply
control integrated control; efficient combination of regulation and fair regulation;
economic regulation and control means and a combination of non-economic
regulation and control.